Wheat prices on Euronext strengthened slightly on Monday

Algeria’s state grain agency purchased approximately 600,000 tonnes of milling wheat in an international tender that ended on Monday, with Argentine wheat expected to be the main source, traders said.

“Prices (in Algeria) are so low that even Black Sea wheat is out of the running,” one trader said.

Purchases were initially estimated at approximately $254 per metric ton, including freight (c&f). Market rumors suggested a low price of $253 per ton c&f.

Initial purchase estimates were around 600,000 tonnes, although some estimates reached as high as 720,000 tonnes.

Algeria’s purchases are not source-specific, but traders had speculated that the wheat could be purchased from Argentina, which is currently offering very low prices for its large harvest.

“Prices are so low that even Black Sea wheat is out of the running,” said one trader.

Wheat was scheduled for shipment in two periods from major supplier regions, including Europe: March 1-15 and March 16-31. If the goods are shipped from South America or Australia, delivery is scheduled a month earlier.

The reports reflect traders’ estimates, and further price and volume estimates are possible later.

Wheat prices on Euronext strengthened slightly on Monday, as traders assessed the difference between a surge in demand from importers and ample supply in exporting countries.

March wheat, the most actively traded on the Euronext futures market in Paris, closed up 0.2% at €191.25 ($222.63) per metric ton.

Volumes were relatively small, as holiday factory closures in Chicago deprived the European market of its usual momentum.

Saudi Arabia’s state grain agency reported on Monday that it purchased 907,000 tonnes of wheat at the tender, significantly exceeding its initial request for 595,000 tonnes, with the Black Sea region expected to be the main supplier. The quality of Argentine wheat from the new harvest was deemed insufficient to cover the large volumes of high-protein wheat purchased by Saudi Arabia.

“All this demand should help maintain stability on Euronext,” said one futures trader.

However, he added, aggressively-looking prices at the Saudi tender underscore the availability of ample export supplies.

The rise in the euro against the dollar also restrained prices on Euronext.

“The week starts with Saudi Arabia and Algeria—the two largest buyers—in the market, but it looks like the western EU won’t receive the bulk of the orders,” said a German trader. “However, it looks like a large volume of supply will be withdrawn from the supply side, as Saudi Arabia’s purchase was much larger than expected.”

Traders noted rising demand for wheat from key EU customer Morocco last week, but competition from cheap offers from Argentina has become a significant challenge in the low-protein wheat sector.

Tags: EU, prices, Black Sea region, wheat