Source: Ukragroconsult (Ukraine)
European wheat futures rose on Tuesday after Egypt surprised the market by announcing an import tender to buy a large quantity of wheat with delivery delays.
However, the price increase was moderate. Traders struggled to understand the announcement, which violated Egypt’s usual tender terms, and some doubted that the country would be able to obtain the hoped-for maximum quantity of 3.8 million metric tons.
Earlier in the day, Euronext was steady, supported by a weaker euro and a rebound in the dollar after a broad sell-off in financial markets on Monday fueled by recession fears.
Wheat futures for September delivery rose 1.2 percent to 218.25 euros ($238.50) a metric ton on Euronext.
Prices rose further after Egyptian state buyer GASC announced that it would hold a tender on August 12. Up to 3.8 million tons were put out to tender, to be delivered between October and April, with suppliers required to receive payment within 270 days.
The departure from the usual Egyptian practice of buying wheat in smaller quantities for short-term delivery has perplexed traders. Some suspect that the risk of a widening war in the Middle East and global economic turmoil may have influenced GASC’s decision.
“This is bullish news at a time when demand is very weak,” said one German trader. “GASC will be able to buy some quantity even with these payment terms. Wheat prices are low and the quantity and quality of the crop has been reduced in both Russia and France.
Traders said sales of Russian wheat and other Black Sea wheat are likely to increase, although offers for the most distant periods may not be attractive to GASC.
According to one trader, Russian wheat with a protein content of 11.5% for delivery across the Black Sea in August/September was worth around $210 per tonne FOB on Tuesday.
France’s soft wheat crop is expected to shrink to its lowest level in 41 years at 25.17 million tons due to rains, Argus Media reported Tuesday, in line with other market estimates.
In Germany, the weather is expected to be mostly hot and sunny this week, which should favor the start of the harvest after repeated delays due to rain.
Traders report quality losses in southern Germany, while the outlook in the northern export zones is better and a few days of favorable weather should allow farmers to complete the harvest.
EU soft wheat exports have risen to 2.18 million tons this season, down 39% year-on-year, although French data is still incomplete.
