Februray 26, 2007

 

High prices of US wheat to affect demand in Iraq, Egypt

 

 

The high price of US wheat may prompt key buyers Iraq and Egypt to look for other grain suppliers from Canada, Europe, Russia and Argentina in tenders that close on Saturday, traders said.

 

Iraq, one of the largest buyers of U.S. hard red winter wheat, is seeking 100,000 tonnes of optional-origin milling wheat for April to May shipment.

 

Egypt's General Authority for Supply Commodities is seeking up to 60,000 tonnes of milling wheat for shipment March 16 to 31, but Egypt often buys larger quantities.

 

A wheat trader disclosed that everything else is cheaper except from US.

 

U.S. hard red winter wheat was the most expensive milling wheat on the market as fund buying has driven up futures prices at the Kansas City Board of Trade, traders said.

 

Chicago soft wheat was at a seven-week high on Thursday amid fund buying brought about by strength in the corn and soybean markets.

 

Canadian wheat is slightly cheaper than U.S. supplies, while Argentina is offering some of the cheapest wheat on the market. Russia and Europe also have cheaper supplies available if transportation costs are included, traders said.

 

Australia is not expected to participate in either tender due to a drought that has slashed production, limiting exports to key long-term customers.

 

U.S. hard red winter wheat for April to May shipment costs about US$212.50 per tonne, free-on-board from the Gulf, traders said. U.S. soft red winter wheat was priced at US$185 per tonne FOB Gulf. Canadian soft wheat is about US$5 to US$10 per tonne cheaper, traders said.

 

The Canadian Wheat Board is not expected to bid on the Egyptian business due to a strike by railroad workers disrupting grain shipments to western ports but is expected to bid on Iraq tender as its shipment dates are already out and takes exports after the specified date.

 

Meanwhile, Argentine wheat costs about US$30 to US$40 per tonne less than U.S. soft red winter wheat, prompting traders to assume that it will also sell some volume to Iraq.