US wheat repaired doubts over export prospects, fostered by
soft official data, by winning half of an order by Egypt at prices which underlined
its competitiveness against European supplies.
Egypt's Gasc grain authority purchased 115,000 tonnes of soft
red winter wheat at its first tender of 2013 - 55,000 tonnes from the US, with
the balance purchased from Canada.
The US wheat was purchased at $307 a tonne - $24 a tonne below
the cheapest offer of French grain.
Supplies from other origins was not offered, despite Gasc's
invitation for prices on cargoes from the likes of Argentina, Poland and
The result helped soft red winter wheat futures make - temporary - headway
Result of Gasc tender
Canadian origin: 60,000 tonnes, at $307.82 per tonne plus freight of $22.50 per tonne from CHS
US origin: 55,000 tonnes, at $307 per tonne plus freight of $22.50 per tonne from Alex Grain
Orders for February 11-20 delivery
"Wheat is getting traction on expectations for improved US
wheat export prospects," Richard Feltes at broker RJ O'Brien said.
Indeed, the victory countered some disappointment over US
Department of Agriculture data showing US export sales of 234,000 tonnes last
week, below expectations of a 325,000-425,000-tonne figure, and a result termed
"poor" by broker US Commodities.
Nonetheless, wheat futures were unable to hang on to gains, closing down 0.1% at $7.44 ½ a bushel in Chicago for March delivery.
The lower close was attributed in part to selling by index funds as part of the annual rebalancing process, which sees them revise portfolio weights back to levels specified by the index they track.
However, Dan Cekander, director of grain market analysis at broker Newedge USA, also noted a "little bit of disappointment" at the US being forced to share the Gasc order with Canadian grain.
EU vs US
Separately, European Union data showed the bloc's wheat shipments, as measured
by export licenses, continuing apace despite higher prices.
Shipments reached 603,000 tonnes in the last two weeks of 2012, and a further 373,000 tonnes in the latest week, taking the
total so far in 2012-13 to 10.1m tonnes.
That is more than one-third higher than the 7.5m tonnes cleared by
the same stage of last season.
"You have to wonder how long Europe can keep exporting at
decent levels, given some disappointing harvests in the region last year," a UK
grain trader told Agrimoney.com.
"That US wheat clearly undercut European supplies at the
Gasc tender, despite the extra shipping costs of getting it across the
Atlantic, shows where more import demand should be heading."
'Need a premium'
At the HGCA, the UK crop bureau, senior analyst Jack Watts
said that "EU wheat values need to remain at premium levels to minimise exports
due to thin availability."
The European Union wheat harvest fell by some 6m tonnes in
2012, but exports are seen rising nonetheless thanks to the dearth of supplies
in the former Soviet Union, where crops were badly hurt by drought.
However, "there is a question mark over how much
international demand remains for this season," Mr Watts added.
In fact, there are rumours in Chicago of buyers from Europe,
besides Brazil and China, seeking US supplies.