Canadian victory in the Saudi Arabia's mega-tender for wheat is a sign that rival grain from the US has become uncompetitive on international markets again, following this month's rally, a leading analyst has said.

Saudi Arabia's grains authority, the Grain Silos and Flour Mills Organisation, said on Monday that it had paid an average of $228 a tonne, including freight, for the 990,000 tonnes of wheat it bought on Saturday from Canada and Germany in one of the biggest tenders of the year.

Half the grain was of 14% protein content, bought at $240 a tonne, and half at 12.5% protein, prices traders viewed as low.

"There was a view that US prices were becoming more competitive," Alex Bos, commodities analyst at Macquarie Securities told Agrimoney.com.

"This result wipes out that possibility. It shows that the Canadian Wheat Board is still willing price competitively, lower than US prices."

US prices were, at Monday's high, nearly 10% above a low hit on June 9, before the CWB revealed that up to 12.5m acres of west Canada sowings may be lost to a wet spring.

No fears?

However, he declined to rule on speculation by some in the market that the CWB's willingness to sell old crop at low prices was a signal that it believed that new crop supplies would be bigger than some investors fear.

"One would think that if the CWB is open to offering wheat at a low price, it can't be too worried about where its next supplies are coming from," a London trader told Agrimoney.com.

Mr Bos said that while it was "possibly" true that the CWB was becoming less worried about this year's crop, it was too early to make a judgement.

"It certainly shows they have still got quite a lot of old cop stocks left," he said.

Prices reverse

Saudi Arabia opted for German wheat, which made up the majority of the order, because of its high specifications, Mr Bos added.

"Germany has high quality wheat, and in the abundance that Saudi Arabia wants."

The comments came as Chicago wheat lost early gains to stand 1.0% lower at $4.57 a bushel, for July delivery, in late morning trade.

Paris wheat for November also retreated, standing 0.5% lower at E141.00 a tonne in late deals.