The purchase of Black Sea wheat by Egypt and Algeria slowed the growth of wheat prices in the EU
European wheat futures were little changed on Thursday as recovery from a four-month low slowed due to stiff export competition from Black Sea suppliers.
Near-month wheat futures for September delivery were unchanged at 215.00 euros ($234.63) a ton on Euronext.
The contract recovered from Tuesday’s four-month low of 211.50 euros, but faced technical resistance in the form of a chart gap formed during Monday’s decline.
Pending positions on Euronext closed slightly lower.
Chicago wheat weakened as the surge from a day earlier faded.
The wheat market received some support this week due to large purchases from Egypt and Algeria.
Western European wheat, however, has been deprived.
“It is encouraging that major importers Algeria and Egypt jointly bought about 1.5 million tons of wheat in tenders this week, which is a significant withdrawal from market supply,” said one German trader.
“However, optimism was undermined by low prices in the Black Sea market, especially in Algerian purchases, as the EU west looked too expensive to win many export sales.”
Traders estimated that of the 700,000-750,000 tons of optional wheat purchased by Algeria on Wednesday, about 550,000 tons could come from russia, 120,000 tons from Ukraine and the rest from Bulgaria.
Russian wheat with 11.5% protein for delivery via the Black Sea in August cost about $207 per ton FOB on Thursday, while Ukrainian 11.5% wheat cost about $215 per ton FOB, about $20 per ton cheaper than in the western EU, according to traders.
Russian wheat with a protein content of 12.5% cost $217-218 per ton FOB, about $20 below prices in the western EU.
In France, the EU’s largest wheat exporter, there are concerns about insufficient export demand for wheat even if the harvest is reduced.
“At some point we will have to get into exports,” said Argus analyst Sebastien Poncelet.
The International Grains Council (IGC) on Thursday raised its forecast for the global wheat crop for 2024/25, emphasizing ample global stocks in the short term.
The IGC also revised its forecast for global corn production, although traders are wary of corn crop losses due to weather conditions in the Black Sea region, which could have negative implications for the wheat market.
“The persistent heat wave in the Black Sea region is ruining corn crops and could drastically change the situation in the grain market,” Poncelet said.
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