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Cairo snub sends Paris wheat to three-year low

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Wheat prices touched a three-year low in Paris after Egypt - the world's biggest buyer of the grain - shut out Canada, France and the US from its latest tender, buying all 240,000 tonnes from Russia.

Egypt's state grain group, the General Authority for Supply Commodities, said it had paid $166 per tonne for eight 30,000-tonne cargos of Russian grain.

The purchases were made from Bunge, Dreyfus, Valars and Venus.

The price was below the $169.50 a tonne offered by Invivo, the cheapest for French wheat, with Louis Dreyfus offering 60,000 tonnes of Canadian wheat at $167.75 a tonne, traders said.

Venus reportedly offered 60,000 tonnes of US soft red winter wheat at $165 a tonne.

'Fierce' competition

A weak showing for Europe had been expected in today's auction, thanks in part to the strengthening of the euro.

"The competition for the Egyptian new wheat tender today should be fierce with a weak US dollar penalizing our exports," Agritel, the French analysis group, said.

However, Russia's clean sweep acted as "a reminder that wheat prices may have further to go", a London trader told Agrimoney.com.

"They're cheaper than they were, but that doesn't mean they can't get cheaper still."

Algerian order?

Australia's increase of 750,000 tonnes to its forecast for the 2009-10 wheat harvest added to the pressure on prices.

However, while Paris milling wheat for November fell to E118.50 a tonne, its lowest since July 2006, at one point, it rebounded to close at E121.15 a tonne, up E2.00 on the day, thanks to a strong start by Chicago crops.

Corn, soybeans and wheat soared on the Chicago Board of Trade on forecasts of a cold front hitting the US Midwest next week.

Rumours that an Algerian order for 300,000 tonnes of wheat has been placed with France also helped prices recover.

London wheat for November closed up £1.25 at £93.00 a tonne.

By Agrimoney.com

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