Black Sea wheat reasserts price competitiveness at Gasc tender

01.06.2017

Black Sea wheat origins reasserted their grip over orders by Egypt's Gasc with a drop in prices viewed as fuelled by the prospect ahead of harvest, and the onset of fresh supplies.

Gasc, grain authority for the world's top wheat importing country, kicked off its orders for delivery in 2017-18, which starts in July, by purchasing 120,000 tonnes of Romanian and Russian wheat at tender for an average of just under $192 a tonne, excluding freight.

The price was a little below the price paid its previous tender, two weeks ago, when US wheat won its first orders at tender from Gasc in more than two years, with prices as low as $185.40 a tonne, more than making up for the extra cost of shipping the cargos across the Atlantic.

However, this time, with US offers soaring to $197.70 a tonne or more, reflecting some revival in global markets and a less aggressive stance by US merchants, the Black Sea origins reasserted their price competitiveness.

Price cuts

Romanian wheat was the cheapest offered, at $191.46 a tonne excluding freight, by Archer Daniels Midland.

Midgulf offered Russian wheat at $192.24 a tonne – down more than $6 on the offer the merchant made to the Gasc tender two weeks ago.

The likes of Alegrow and AOS also reduced their prices for Russian wheat, compared with the previous tender, with Glencore cutting more than $3 a tonne from its offer for French wheat, discounting it to $198.29 a tonne.

Russia and Romania were the top origins for Gasc purchases over 2016-17, with Ukraine in third place.

'Supplies only going to get bigger'

The Russian price cuts in particular "look a sign of traders attempting to make a quick start to the new season," a European grain trader told Agrimoney.com.

"There is plenty of wheat left around in Russia, after last year's big harvest and exports which have fallen short of some initial expectations.

"Supplies are only going to get bigger as the new crop comes onstream."

Russia's 2017 harvest too is expected to be a heavy one, although with some worries over cold weather which has slowed spring sowings progress, which for wheat is running 1.2m hectares behind the year-ago pace, according to analysis group SovEcon.

"The development of sowings is lagging behind schedule… The risks of disease development are rising," SovEcon said in a briefing earlier this week.

Romania upgrade

Separately, Coceral on Wednesday nudged higher by 98,000 tonnes to 7.90m tonnes its forecast for the Romanian soft wheat harvest this year, even as it cut its forecast for European Union output overall by 2.83m tonnes, to 142.0m tonnes.

The revision reflected in the main reduced expectations for the French and Spanish harvests, with production hopes for Germany and the UK receiving smaller downgrades.


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