Russian wheat sales seen picking up ahead of USDA WASDE report

08.08.2018

The Russian wheat market cold be busy ahead of Friday's release of the US Department of Agriculture's latest World Agriculture Supply and Demand Estimate report which will likely contain sharply lower production forecasts, sources said Tuesday.

Many participants expected the report to cut Russian and Ukrainian production forecasts from 67 million mt and 25.5 million mt, respectively, in light of poor harvest results after damaging weather conditions.

Similarly, market participants were expecting a big fall in European corn and wheat levels year on year.

Persistent searing hot weather and a severe lack of precipitation across many key grains exporters has triggered some of the sharpest weekly and monthly price rises seen in many markets.

Russian 12.5% protein wheat was assessed at $203.75/mt Monday by S&P Global Platts, up $30.50/mt month on month. The last sharp rise was between September and October 2015 when prices rose $15/mt, Platts data showed.

NYSE Liffe milling wheat rose Eur35.75/mt ($41.5/mt) in the past month to Eur214.75/mt Monday.

Accordingly, many importers have slowed their buying of Black Sea origins on the higher prices, preferring to nibble into their stocks.

But with prices rising rapidly and little consensus on where there the peak will be, destination buyers will soon start making big purchases, sources said.

Egypt's state grain agency, GASC, for instance, has only purchased 1.62 million mt in the 2018/19 marketing year, which began July 1, compared with 2.26 million at the same time last year.

"Once Turkey and Egypt come back, prices will explode. If I were an Egyptian grains buyer, I would be looking at the WASDE report and consider buying before then," a source said.

Some big buyers have started to return after a lull. Indonesia bought an FOB Panamax size 11.5% Russian protein wheat parcel Friday for second half of August loading at $218/mt.

Elsewhere, high quality protein wheat was becoming scarcer in Turkey, whose currency has weakened sharply in recent sessions.

Indeed, Turkish buyers have been buying on a spot basis to minimize cost outlays, as some distressed cargoes can be found at a discount to parcels several weeks in advance, sources said.


spglobal

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