It was a sea of red across global grain futures markets by the close of last night’s session.
The US market had a bit of an epiphany and decided they had pushed wheat values too high and were now uncompetitive in the global market.
Market wires vary on the tonnage, between 390 – 500kt, but Algeria confirmed they paid less than their last tender overnight. Priced at about US$218 C&F it would mean to compete with EU wheat into Algeria that US wheat would need to come in at something like US$185 FOB. Currently we are seeing it closer to US$215. This is probably an unfair example though as it is very rare for US grain to move into that part of the world when the EU and Black Sea supplier is basically at the back door. There’s around US$12 difference in frieght to start with.
A better comparison might be from Argentina to Asia versus the Gulf of Mexico to Asia or the Pacific North West to Japan. US Gulf to Japan is US$36, Argentina to Japan is about US$28. US wheat is about US$10 under Argentine wheat at FOB, so there will be little difference at the destination. I similar comparison for Black Sea wheat to China versus US wheat to China shows only US$1.00 difference in values FOB China, tariffs aside. So potentially US wheat isn’t that far off the pace it’s just that every man and his dog has a pile of wheat to sell at present.
In Europe milling wheat futures were lower, the cash market was also a little softer. Germany saw some more rain which kept a lid on prices thus basis remained stable and offers into their domestic market slipped in line with futures, down a couple of Euro.