EU wheat near 10-month low on Black Sea competition
European wheat hit a nearly 10-month low on Friday on export competition, although high premiums on the cash market due to tight available supplies continued to support prices, traders said.
Benchmark March milling wheat (BL2H3) on Paris-based Euronext unofficially closed 1% lower at 288.50 euros ($312.16) a tonne after falling as low as 288.25 euros in afternoon trade, equaling the 10-month low hit on Wednesday.
The success of Russian wheat in two major purchase tenders from Turkey and Egypt this week depressed the west EU export outlook, with Russian supplies offered cheaper despite increases in ship insurance costs in the new year.
“Any expectations the rise in ship insurance costs would be a serious handicap to Russian exports are now evaporating,” one German trader said. “There is some talk in the market that it is difficult or even sometimes not possible for some trading houses to get insurance for ships calling in Russia.”
“But the large numbers of offers and the low prices at which Turkey was able to buy over half a million tonnes in a matter of hours on Thursday, including a large volume from Russia, showed that higher shipping insurance costs are not the serious obstacle supposed for Russian exports.”
Traders also noted cheap prices being offered for shipments through Ukraine’s safe shipping corridor, with the main problem being slow inspections to pass through Turkish waters rather than loading in Ukraine.
Sales offers for large 60,000-tonne consignments of Ukrainian 11.5% protein milling wheat were made on Friday for as low as $300 FOB a tonne for February shipment from ports in the safe shipping corridor, with 60,000 tonnes the same grade of Russian wheat offered at $308 a tonne FOB.
Wheat premiums on the French cash market (WHEAT/RTR) were pulled by strong exports set to continue in January, with traders citing fresh sales to Morocco and cargoes for Algeria that were previously expected to be sourced from the Black Sea region.
In Germany, standard 12% protein wheat for February delivery in Hamburg was offered for sale at a premium of about 14 euros over the Euronext March (BL2H3) contract but with little purchase interest visible.
“I think premiums are so high not because of strong demand, but because supplies are tight following big export shipments from Germany after the war in Ukraine started while the harvest was also poor quality after the heatwave last summer,” another German trader said.