The Algerian tender is the main focus point for a lot of punters at present. As mentioned yesterday, the value of US$320 C&F +/-, was around US$30.00 higher than the previous tender.
There is speculation that this was to counter some of the extra execution cost from the Black Sea, but to put it simply, it doesn’t if it’s Russian or Ukraine. Not only has Black Sea freight gone up more that that in the last month, it is also very hard to find a boat willing to risk being attacked to load Black Sea wheat.
The risk isn’t only a Ukraine or Russian risk either. Take Romanian Black Sea rates they too have increased. Some locations closer to Ukraine greatly so. On average the value has gone from around US$29.00 to US$34.00, up US$5.00. This is across the board, rates from Romania to Spain have gone from US$34.60 in July to US$38.30, to Egypt US$21.80 to US$23.50/t. It’s not as bad as Russia to Algeria, US$27 to US$105, but it starts to widen the draw arc for supply, but is doesn’t explain the entire +US$30 price.
The C&F Algeria number, US$320, comes in around US$272 FOB US NOLA. Current FOB New Orleans is probably closer to US$355, so it’s a mile off working. French milling wheat is roughly US$270 FOB, plus an ocean rate of US$30.50/t, lands it at Algeria for roughly US$300 +/-. Does Algeria hate Macron enough to miss US$20.00, possibly, but I doubt it. Romanian milling wheat is valued at roughly US$278.75/t, plus US$34.00 giving it a value of around US$313+/- C&F Algeria.
International values continue to find support from the lack of grain moving out of the Black Sea. Russia has a bottle neck at their western ports and execution risks moving grain to port through Latvia and Lithuania. This is not going to solve the Black Sea issues in the short term.
The other issue now is the percentage of wheat and durum that will be weather damaged in Canada. The market hasn’t really spent a lot of time focusing on this just yet. The Ukraine / Russia war is hogging the spot light, but it is well worth watching for confirmation to se if it is a bad as ground reports say it is.