IKAR in Mass and Industry Media

PM markets: Russian supplies weigh on European wheat prices

Agrimoney.com

European wheat prices drifted lower, under pressure from heavy Russian supplies, with the US markets closed for a national holiday.

Russian wheat prices fell last week, the second such drop in a row, reflecting the heavy local harvest.

Moscow-based consultancy Ikar reported Black Sea prices for Russian wheat with 12.5% protein at $170.50, down $1.50 from a week earlier.

SovEcon, another Russian consultancy, quoted wheat prices in the Black Sea area down $2.50 from last week, at $172.50 per tonne.

But the fall in feed wheat prices was even more abrupt, reflecting the generally unremarkable quality of the Russian crop, leaving a glut of lower protein wheat.

Black Sea feed wheat prices fell $10 to $154 a tonne, Ikar said.

Wheat duty scrapped

On Friday the Russian Prime Minister Dmitry Medvedev announced a cabinet decision to scrap the country's wheat export duty for two years.

The move is unlikely to have a strong effect immediately, as current wheat prices mean the variable tariff has mostly been stuck at the minimum duty of 10 roubles a tonne.

"Russia has finally ended its export taxes on wheat for two years as expected, thanks to the very good harvest they are about to finish," said Agritel.

"The country is likely to export up to 30m tonnes of wheat this year which would be a new record."

Ergot ban

On Monday the Egyptian health ministry banned the import of wheat containing any level of ergot contamination, bringing its policy in line with that of the agriculture ministry.

Traders say that the no supplier can guarantee their cargoes to be free of even trace levels of the grain, meaning that such a move will greatly discourage sellers from booking cargoes to Egypt.

A tender held by Gasc, the state grain buyer last week, was cancelled after receiving only one offer, demonstrating sellers' unwillingness to risk rejected cargoes.

Algerian tender

Still, there was a touch of support on Monday, as the Algerian state grains agency issued a tender to buy soft milling wheat by September 7.

The tender is for a nominal 50,000 tonnes, but based on past performance the actual quantity purchased could range much higher.

Traditionally such a tender would be almost guaranteed to go to French suppliers, but this year, given the small size of the French crop, and abundant competition from the Black Sea, such an outcome is by no means certain.

December Paris wheat futures finished down 0.5%, at E160.75 a tonne.

The soon-to-expire September contract was more sharply down, 2.2% on the day, at E154.50 a tonne.

In London, prices came under extra pressure from a stronger pound, with the November contract down 1.4% on the day, at £321.00 a tonne.

London softs get oil market boost

Soft commodity prices in London got a boost from the rising value of crude oil.

November robusta coffee ended up 0.6% $1,877 a tonne, after reaching an 18-month high of $1,881 a tonne.

October white sugar futures finished up 0.2%, at $540.20 a tonne.

But London cocoa prices, which are sterling denominated, came under pressure due to the stronger tone for the British currency.

December London cocoa settled unchanged, at 2,275 pounds a tonne.

06.09.16

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