Export hopes seen to strengthen US wheat price

 

 

The slump in US wheat has made it competitive in world markets, lowering the threat of further price falls, Commerzbank has said, even as a leading forecasting group raised its hopes for the winter crop.

 

Chicago wheat for July delivery dipped to US$4.38 a bushel at one point late last week, its lowest since September. The decline took to nearly 12% the grain's losses over the last month, far bigger than the declines in Chicago's corn and soy markets.

 

And Informa Economics presented the market with further bearish news by raising to 1.48 billion bushels its forecast for America's winter wheat crop.

 

The 15-million-tonne revision took Informa's estimate 23 million tonnes above the USDA's forecast, and follows promising results from early harvesting in Oklahoma and Texas.

 

However, Commerzbank raised doubts about how much further price falls would go, noting that Chicago prices were now trading in line those in Europe, which has enjoyed a notable upturn its grain trade fortunes this year, largely thanks to the declining euro improving the affordability of the region's exports.

 

Last week's price low equates to less than US$159 a tonne, or the equivalent of a little over E132 a tonne, in line with the nominal price of Paris's August contract.

 

The better-traded November lot stood EUR0.50 higher at EUR139.25 a tonne in late deals.

 

The comments come the day after French wheat on Thursday won 60,000 tonnes of a 180,000-tonne order by Egypt, the world's biggest buyer of the grain.

 

US wheat, once a regular victor in the Egyptian tenders, has not featured since last autumn, being frozen out by grain from France and, in particular, Russia, whose price competitiveness has allowed the country to emerge as a major wheat exporter over the last decade.

 

Shipping is also cheaper to Egypt from Russia's Black Sea ports than from North America, or even France.

 

France's victory came as a surprise to some observers after Cairo confirmed its commitment to 60,000-tonne shipments, loaded at one port, and the failure of French grain to win any of a 180,000-tonne tender by Egypt last week.