It was good to see the USA feature in the suppliers list for the Egyptian tender, what wasn’t good was the price. Most of the punters were expecting to see values around US$5.00 higher than Egypt’s previous purchase due to the change in payment terms from prompt to 180 days but instead supply values were actually lower.
Cargill sold 60kt of US wheat at US$221 per tonne FOB for soft red winter wheat, this was the lowest value wheat offered. Freight from the US to Egypt saw the US offer landed at Egypt for US$248.29 & US$248.58. The next closest offer was Romanian wheat at US$250.06 including freight. There was a parcel of Russian wheat offered that came in at US$251.75 including freight.
Basically the US need to be around US$25 cheaper than Russian wheat at an FOB level to compete into the Egyptian market.
US wheat futures were lower in overnight trade as the numbers from the Egyptian tender confirmed to compete US wheat needs to remain around these levels. In order to have a crack at the 1mt Ethiopia are looking to buy over the next month the US will need to keep a check on any potential rally in old crop futures.
A quick look around the global weather maps shows that most of the Northern Hemisphere producers are still in good shape as is Argentina. Crop condition rating in the US actually improved even with the current flooding.