Canada Markets

Tides May be Turning in the Global Wheat Trade

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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There is a lot to be said when the world's largest wheat buyer looks in your direction, which was the case seen in the Egyptian tender results released, news that may play a role in setting price direction in Friday's shortened trading session.

On Oct. 26, it was reported Egypt's General Authority for Supply Commodities (GASC) purchased 470,000 metric tons in a tender that included one 60,000-mt shipment from the United States Gulf ports. This shipment was reported to accompany six shipments of Russian wheat and one shipment from Ukraine, with an average price of $232.23/mt FOB or roughly $253 delivered. This was of particular interest to the U.S. market, given that the country's wheat was reported to be largely shut out from Egypt's tenders since July 2017. Dow Jones reported at least 20 offers were made in this tender, with offers from Russia dominating the field.

The December SRW chart shows the Oct. 26 close up 18 cents, after the previous day's trade reached its lowest point since January. The news was welcomed by the market. On Oct. 25, the December/March futures spread reached its most recent low of minus 20 1/2 cents, while ending at minus 8 cents on Nov. 21. As well, the noncommercial SRW net-long futures fell for 12 consecutive weeks as of the week ending Oct. 30, while has increased for two consecutive weeks since. Both commercial and noncommercial traders have shown signs of optimism.

Thursday's GASC tender for Jan. 10-20 delivery saw at least 17 offers made, still dominated by Russia with 11 offers in total. Social media sources indicate that 60,000 mt was purchased from Russia, 60,000 mt from Romania and 120,000 mt was purchased from the U.S. The price was reported to average $228.42/mt FOB across all purchases, slightly lower than the last tender.

Of interest was that U.S. supplies made up one of eight shipments to Egypt in the late October tender, while two of four shipments in the late November tender. The market is anxiously waiting for Russia's supplies to dwindle and Friday's trade should reflect this enthusiasm.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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