The tumble in prices won the US wheat its first victory of
the season at the benchmark tenders tun by Egypt's Gasc authority, despite the
extra cost of shipping to the North African country across the Atlantic.
Gasc followed up its huge 535,000-tonne purchase of European
Union and former Soviet Union wheat on January 3 by buying 55,000 tonnes of US
soft red winter wheat, offered by Ameropa.
The purchase was the first of US by the grain authority at tender
since February last year, although Egyptian buyers, the world's top wheat-importers,
had bought 220,000 tonnes through other channels ahead of the tender.
The victory appears testament to the extent to the
improvement in the competitiveness of US wheat thanks to its plunge since the
end of November, a period during which it has lost 12.4% on Chicago's futures
'Far more attractive'
"US wheat has made itself far more attractive over the past
few weeks," a UK grain trader told Agrimoney.com.
"Europe has continued to pick up orders, but it can no
longer take that for granted, even with its usual buyers."
The US win comes despite a significant freight disadvantage
to shipping to Egypt across the Atlantic, rather than just through the
Mediterranean and Black seas.
Gasc is believed to be paying $38 a tonne freight for the
Ameropa wheat, compared with prices of $16-17 a tonne for shipping from the Black
The winning US soft red winter wheat offer was, at $265 a
tonne excluding freight, considerably cheaper than, for instance, the move
competitive Russian grain, priced by Cargill at $293.25 a tonne.
The cheapest French wheat was offered by Louis Dreyfus, priced
at $284.84 a tonne excluding freight.
'Record low wheat
US wheat prices have been hurt by a signs of a slowdown in
export sales, by increasing ideas of the world's 2013-14 harvest, which the
USDA on Friday upgraded by 840,000 tonnes to a record 712.7m tonnes, and by a
switch by consumers to corn.
This dynamic was highlighted by data on Friday which showed
US wheat stocks as of December 1 far larger than had been thought, reflecting
that "wheat feeding was a record low" for the October 1-December 1 quarter,
according to broker CHS Hedging.
Meanwhile, corn stocks were pegged below traders'
expectations, implying feed use for the period "at just over 2.4bn bushels, a
record for the quarter", CHS said.
In fact, according to CHS Hedging, the figure implies that
"wheat feeding was a record low during the second quarter of the marketing