April 2, 2012

Spain ups US wheat imports due to drought

In order to replenish port silos, Spain has imported US wheat and more is expected in the coming weeks, as consumers prepared for tight domestic supplies due to drought, trade sources said on Friday (Mar 30).

In addition to a 38,000-tonne cargo of soft red winter (SRW)wheat currently unloading in Spain's leading grains port, Tarragona, trade sources said cargoes of up to 120,000 tonnes are expected in early April.

The USDA has logged sales of some 155,000 tonnes of SRW to Spain in March, while the EU has granted licences to import 430,000 tonnes of US wheat into the 27-bloc.

Spanish dealers usually prefer to import wheat from Black Sea countries, but hold-ups due to a recent cold wave and pricing turned their attention to US and Brazilian wheat.

US wheat has recently become more competitive on world markets, especially due to a weakening dollar, and won business on Wednesday from the world's biggest buyer, Egypt.

Spain has also used EU import licences which expire on Saturday to buy Black Sea wheat, including 55,000 tonnes from Ukraine and 22,000 from Russia unloaded last week in Tarragona. The only confirmed Black Sea wheat cargo for Tarragona is some 23,000 tonnes from Bulgaria, which as an EU member does not require import licences.

Some 120,000 tonnes of Ukrainian corn is expected in April, which is now trading at an unusual discount to wheat in Tarragona, rather than the premium usually commanded as it is the ingredient of choice in animal feed. In Cartagena, Spain's No. two grains port, 24,000 tonnes of Ukrainian corn was unloading.

"It doesn't look as if much more wheat supply will be coming, it is on a downward slope and corn will unseat it from the (feed) mix as of mid-April," a port source said.

Total wheat stocks in Tarragona stood at an estimated 340,000 tonnes, up from 300,000 at the beginning of the month, while silos held 140,000 tonnes of corn. Loadings were some 11,000 tonnes a day.

"I reckon that as of the end of May, unless the drought brings things forward, the main origin will be new crop from Bulgaria or Romania," the port source added.

"This year, some will want to keep stock here to tide them over to the Black Sea harvest, because here domestic crop will likely be retained as if it were ready cash."

After Spain's driest winter since at least 1947, farmers say the winter wheat crop urgently needs rain or yields could fall by 30-60%.

Even with a bumper crop, Spain needs to import some 10 million tonnes of grains a year, making it a market which lures interest from producers in Argentina to Kazakhstan.