Volumes of wheat with price-to-be-fixed hit all-time high

Volumes of wheat with price-to-be-fixed hit all-time high

Although wheat sales are lower than in other years, in spite of record harvest, trades under to-be-fixed conditions hit a new high. Lower cereal global stock support international prices.

The volume of wheat traded on the domestic market already exceeds 14.6 Mil MT. Of this total, more than 2.7 Mil MT are yet to set prices, making it the largest volume pending fixing recorded for this time of year.

One would believe that the robust 2021/22 harvest, the highest on record, would inevitably lead to a record trade volume, though this hasn’t been the case yet. In fact, for the last week of January, the 2019/20 campaign showed a higher level of wheat sales, with about 15.6 Mil MT of cereal, almost one million tons more than the volume currently marketed.

Of the total volume with prices to be fixed, 85.7% corresponds to purchases by exporters, a percentage comfortably higher than the 68.6% average of the last five years. This proportion is only surpassed by the 2019/20 campaign, when almost 88% of purchases without a fixed price corresponded to wheat exports, with the remaining part corresponding to the crush industry.

During the week, buying prices for spot delivery in the Rosario Cash Market were around 243 USD/MT, 8 USD/MT higher than the previous week. For March and April delivery, the purchase offers were at 250 USD/MT, 10 USD above the values ​​of last Friday. As for June/July deliveries, the offers rose 3 USD/MT and remained at USD 245.

Additionally, MatbaRofex futures surpassed 250 USD/MT for March, regaining ground after lows in early February, but still 8 USD/MT below the high they traded at in mid-November 2021.

Another commercial novelty of the week was the entry of export sales corresponding to the 2022/23 campaign, which will formally begin in December 2022, for 1.8 Mil MT. In line with this, the first bids for 2022/23 wheat were seen in the local market for NDJ delivery, at levels between 235 USD/MT and 240 USD/MT, as the week progressed. In Matba-Rofex, DEC 2022 futures rose more than 15 USD/MT since the beginning of February, closing the week around 240 USD/MT. In addition, several FOB brokers published the first references for export premiums for the coming campaign, around 298 USD/MT.

International prices also on the rise, without losing focus on the Black Sea

The week began with dry weather on the US plains, which led to a rebound in international prices. To top it off, investment funds began to strengthen their net buying position, which continued to support wheat prices in Chicago.

On Wednesday, with the publication of the WASDE, the global balance sheet for wheat 2021/22 for the USDA projected less supply, more consumption, more international trade and lower global stocks. Although more aggressive stock cuts were expected, forecast was reduced nonetheless, resulting in another bullish day for cereal prices.

This way, throughout this week international prices changed sign and resumed the upward path that had been lost last week. Wheat closed Thursday near 288 USD/MT, more than 11 dollars above last Thursday’s 277 USD/MT.

Although the military tensions in the Black Sea were not the center of attention this week, there are still concerns about a possible escalation of the conflict in Eastern Europe. An actor very interested in a peaceful outcome of this crisis is Egypt, the world’s largest importer of wheat.

In recent years, the land of the pharaohs imported more than 12 Mil MT of wheat in each campaign, with an outlook of importing more than 13 Mil MT in the 2021/22 campaign, which is expected to be its highest import level in history. The origin of the wheat imported into Egypt is exceptionally from the Black Sea region, with a significant participation not only from Russia and Ukraine, but also from Romania.

As uncertainty persists, Egypt is turning to Australia and other wheat suppliers to secure its domestic supply. For now, in recent weeks it is believed that the Egyptian authorities have brought forward their international tenders to obtain supplies as soon as possible.

Source: https://bcr.com.ar/

Photo: REUTERS/Stringer

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