The US futures market overlooked the good weekly US wheat export sales number that was 48% above the prior 4 week average, and decided to concentrate on some profit taking. Dec wheat has closed higher on 4 of the last 5 sessions. Prior to the release of the US export data the trade had estimate a number between 150kt and 450kt, the actual number reported being about 444kt, towards the higher end of the pre-report estimates.

International wires are starting to pick up on the recent frost damage in Australia. Some private estimates falling by 1mt to 4mt at the national level. Drought in S.Aust and frosts across Victoria and the Riverina district in NSW should see official production estimate lower in the next ABARES report. Production in Australia will still more then satisfy domestic demand leaving exports just a tad lower than previous estimates.

Egypt has proposed the blending of up to 20% corn flour with wheat flour for bread production. There is industry push back on this with bakers and consumers generally fearing an inferior product will result. If implemented in April next year as proposed by the government, it may see wheat import demand shrink by as much as 1mt pa. Bread is subsidised by the government in Egypt thus the interest in reducing wheat imports. This isn’t the first time that Egypt has been down this path, the government abandoned this procedure about 20 years ago after industry complaints and quality concerns. The big incentive is that corn would be acquired locally, saving valuable US dollars for other imports. At current wheat and corn values the Egyptian government stands to save roughly US$35 – US$40 per tonne, over up to one million tonnes, that is significant for Egypt. Consumer push back will be a huge hurdle, there’s a big difference in texture between corn flour and wheat flour, not to mention taste and smell. Have a slice of gluten free bread and you will quickly understand, it’s rubbish. There was also talk that the government was also considering the use of sorghum flour too.