French Wheat At More Than 5-Year Lows, But Still Misses Out On Egypt Tender

03/09/15 -- EU grains closed mixed, but mostly lower, although rapeseed prices managed to buck the trend.

At the close Nov 15 London wheat was GBP1.50/tonne lower at GBP110.50/tonne, Sep 15 Paris wheat was EUR6.25/tonne easier at EUR146.75/tonne, Nov 15 Paris corn was down EUR1.00/tonne to EUR162.25/tonne, whilst Nov 15 Paris rapeseed was EUR1.75/tonne firmer at EUR359.25/tonne.

Friendless and soon to expire Sep 15 Paris wheat fell to levels last seen on a front month more than 5 years ago. The gap between it and the benchmark Dec 15 contract is now almost EUR20/tonne. Based on tonight's close, converted into sterling, it's only worth the equivalent of around GBP107/tonne!

With silos in Rouen and Dunkirk reportedly choc-full of wheat, the further intake of which is suspended, French sellers are clamouring to make some room after their recent record harvest.

That explains why Soufflet offered Egypt's GASC French wheat at $174.74/tonne FOB in their latest tender today - a price that was around $2.50/tonne cheaper than last Friday's winning Ukraine bid, and also $11/tonne below the price that the French grain giant offered their wheat at at the time.

Even that wasn't low enough to win the business though, with Russian sellers securing the order, albeit courtesy of cheaper freight rates, selling GASC three cargoes of wheat at around $188/tonne including shipping - around $2/tonne less than the price paid on Friday.

Russia's Minister of Agriculture was quoted as say that he saw no reason to adjust the way that the current export duty on wheat is calculated. Based on today's winning Russian bids in the GASC tender (priced at the equivalent of around RUB12,000/tonne) there would be a duty payable of RUB450/tonne (circa $6.50/tonne) on these sales if the rouble value holds it's current level versus the USD.

The shipping period is Oct 11-20 though, so this is far from certain especially with the rocky ride that we've seen in crude oil values of late. The risk on that one remains with the sellers.

Meanwhile, the 2015 Russian harvest is said to be 58.9% complete on 27.7 million ha producing a crop of 73 MMT to date. The Ag Ministry are forecasting a final grain crop of 100-103 MMT versus 105.3 MMT a year ao.

Wheat accounts for 49.7 MMT of what has been harvested so far off 62.5% of the planned area. Wheat yields are said to be averaging 2.96 MT/ha versus 3.25 MT/ha a year ago.

The Kazakh havest is said to be 16.8% complete on 2.5 million ha producing a crop of 3 MMT to date. They expect a final harvest of "not less than 17.2 MMT" which is the figure achieved a year ago.

Algeria were reported to have bought around 400,000 MT of optional origin wheat in their latest tender. It would seem highly likely that at least some of this will prove to be of French origin, as Algeria is a destination that offers France a freight advantage over Black Sea material.