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Wheat price slides on second Russia clean sweep

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Egypt's preference –once again - for Russian wheat over European and North American supplies has ended the grain's resistance against bear pressure in Chicago.

Egypt's General Authority for Supply Commodities (GASC) opted to fill all of 150,000-tonne wheat tender with Russian grain, two weeks after turning to the former Soviet country to fulfil all of a 240,000-tonne contract.

While Russia, whose grain is competitively priced, had been expected to score well in the latest tender, traders had viewed a second clean sweep as unlikely.

Priced out

"People had thought France, the US, or both would get some consolation prize," a London trader told Agrimoney.com.

In Chicago, Vic Lespinasse, GrainAnalyst.com analyst, said: "Egypt had been expected to buy mostly non-US wheat but there was hope they might buy a cargo or two of US, which didn't turn out to be the case."

The cheapest French wheat offered to the GASC was $177.80 a tonne with US grain offered at a little over $172 a tonne, both above the $170-170.25 at which Russia completed its order.

The GASC has now not bought from France or the US in open tender for nearly a month.

Inflation fears

The news sent wheat sliding on both sides of the Atlantic. In Chicago, December wheat fell to $4.41 ¼ a bushel at one point, its lowest for two weeks, before recovering some ground to stand down 9.25 cents at $4.46 ½ a bushel at 17:30 GMT.

Wheat had held above $4.50 a bushel for two weeks amid thoughts that the grain had suffered enough at the hands of bears.

Growing inflation fears are also reviving interest in farm commodities, some analysts say.

In Paris, November milling wheat for November closed down E0.50 at E122.25 a tonne, while London feed wheat for November ended down £0.65 at £98.00 a tonne.

Spread play

Corn did better, however, adding 1 cent to $3.39 ¾ a bushel in Chicago.

Besides continuing concerns about China's crop, which potentially could return the country to importing the grain, some traders played a "short wheat, long corn" spread.

Soybeans for November slipped 1.75 cents to $9.17 ¾ a bushel, as harvest pressure and the prospect of huge yields continued to tell.

By Agrimoney.com

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