Wheat prices may have reached a floor for now after dropping in Europe and South America sufficient to leave Black Sea exporters, renowned for their competitiveness, reliant on differences in shipping costs to win business.

Egypt, the top wheat importer, bought a further 240,000 tonnes of Black Sea wheat at the weekend, mostly from Russia, although 60,000 tonnes were of optional origin from within the region.

The order took confirmed orders by Egypt's General Authority for Supply Commodities (Gasc) for Russian wheat nearly to 2.9m tonnes since Moscow lifted a grain export ban at the start of July, the beginning of the 2011-12 marketing year.

Price leadership cut

However, the Black Sea faced its toughest competition since then to win the business, with French wheat offered $9 a tonne cheaper than a week before, and within $0.70 a tonne of winning Russian bids, at $249 a tonne.

At the previous auction, French wheat was more than $8 a tonne more expensive.

And the price of Argentine wheat fell nearly $6 a tonne over the week to $233.40 a tonne.

The reductions left Black Sea wheat milking its cheaper shipping costs to Egypt, of about $5 a tonne versus French grain and $25 a tonne compared with Argentine, to maintain Gasc's favour.

Demand hit 

The fall in French tender prices, which earlier in 2011-12 were more than $30 a tonne more expensive than Russian ones excluding freight, reflects in part shockwaves from South American victory in an Algerian tender last week – usually bread-and-butter business for France.

"Part of the cut in French prices is down to the weak euro. But there does seem to be a greater appreciation that the demand situation is not so rosy, and, with other countries willing do discount, that French farmers may have to accept less than E200 a tonne," a UK grain trader said.

The UK grain arm of a major global commodities house said in a report: "The arrival of supplies from South America has forced [wheat] values down," with extra pressure coming from the prospect of "what is expected to be a bumper crop in Australia" reaching the international market.

CBH, the main grain handler in Western Australia, the country's top wheat-growing state, reported on Monday that it had received 1.7m tonnes of grain in a week, although there were reports of mixed quality in some areas, following harvest rains last month.

"From just a few days of dry weather across most parts of Western Australia, the amount of grain in the bins has more than doubled in a week," CBH said.

'Grower backlash' 

But prices would "not necessarily" continue to fall, the UK grain merchant said, pointing to the prospect of values heading back near, raised, production costs.

"The ultimate supplier of this wheat, the grower, in places as far afield as South America and Australia, is now facing ex-farm values in locations that are far from the ports of less than the equivalent of £100 a tonne," the merchant said. (£100 a tonne is equivalent to $156 a tonne, or $4.25 per bushel.)

"At this level there seems to be a grower backlash to these lower prices and put simply they aren't happy to sell."

The merchant added that "generally it is felt that the consumers are circling and waiting to come into the market to buy cover for December through to February".

Nonetheless, prices on Monday dropped in Paris by 1.1%, to E180.00 a tonne for January delivery,  and in London by 1.0% to £146.00 a tonne for the best-traded May contract.