Hard red winter wheat prices returned to the back foot
versus other varieties after data showed cancellations by importers of US
supplies, unusually, exceeding fresh business, as Brazil's tariff reinstatement
The US Department of Agriculture reported net export sales cancellations
of 25,000 tonnes of hard red winter wheat last week ï¿½ a dynamic usually only
seen towards the end of the crop year as buyers switch delivery to the
"This is usually the kind of thing we see only in the last
few weeks of the season," Brian Henry, at US broker Benson Quinn Commodities,
Indeed, it is the first negative export sales figure for
hard red winter wheat not involving May, the last month of the crop year, since
2009, and the first to occur in August since at least the 1980s.
The weak performance reflected the cancellation by Brazil, a
structural importer of hard red winter wheat, of a net 59,000 tonnes in orders,
after the country reinstated from last week a 10% tax on imports from outside
the Mercosur trade block.
Brazil has been importing unusually large quantities of US
wheat over the last 18 months, after a poor domestic production, and weak output
in Argentina, Brazil's default origin for imports, forced it to look elsewhere.
And it has left the US - with 3.28m tonnes in hard red
winter wheat shipments or unfulfilled orders - looking at its worst start to a
season for export demand for the class in five years.
The performance contrasts with 2.21m tonnes for soft red
winter wheat, the type traded in Chicago, for which trade has begun 2014-15 with
unusual briskness for the variety.
'Not the demand'
"Demand for soft red winter wheat has been better than many people
believed and Gulf basis has remained pretty firm," Mr Henry said, referring to
the prices in US Gulf of Mexico ports.
"But basis on hard red winter wheat has not performed so
well. There is just not the demand for it at the moment."
The premium of hard red winter wheat futures, traded in
Kansas City, to Chicago-listed soft red winter wheat touched 74.75 cents a bushel,
September basis, on Thursday reversing after three days of recovery slumping
from a late-June high of $1.38 ï¿½ a bushel.
Against Minneapolis spring wheat the Kansas City premium,
which reached 32 cents a bushel in June, narrowed to 5 cents a bushel.