(Bloomberg) – Wheat fell in Chicago after Iraq and Egypt shunned U.S. grain in tenders yesterday, indicating prices may need to decline to be competitive in Middle East markets.
Egypt, the world’s largest wheat buyer, bought 60,000 tons of wheat each from Romania and Ukraine yesterday, while Iraq purchased 150,000 tons of Australian wheat and 50,000 tons of the grain from Canada.
“The market is still focusing on U.S. wheat export competitiveness, as we saw Iraq buy both Australian and Canadian wheat over U.S.,” U.K. grain trader Gleadell Agriculture Ltd. wrote on its website. “The Egyptian wheat tender yesterday also saw them purchase Black Sea-origin once again.”
Wheat for December delivery fell 0.3 percent to $6.61 a bushel on the Chicago Board of Trade at 5:31 a.m. The grain has slumped 15 percent in Chicago this year amid an outlook for bigger world production of wheat and corn.
Milling wheat for November delivery traded on NYSE Liffe in Paris declined 0.1 percent to 184 euros ($245) a metric ton, close to the lowest level since December 2011.
Wheat spot prices in New Orleans were $259.41 a ton yesterday, while the costs of shipping a ton of the grain from the U.S. Gulf to Egypt are about $25.58 a ton, according to rates provided by AXS Marine. Egypt’s state grain buyer bought Romanian wheat for $251.35 a ton yesterday, and shipping costs from the country’s port of Constantza are about $13.10 a ton.
Corn Gains
Corn for December delivery rose 0.2 percent to $4.6025 a bushel. Prices dropped to $4.55 yesterday, the lowest since October 2010. Futures trading volume was 27 percent lower than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
“The low of $4.55 should act as a support level,” said Faiyaz Hudani, an analyst at Kotak Commodity Services Ltd.
Corn has tumbled 34 percent this year, the second-worst performer on the Standard & Poor’s GSCI gauge of 24 commodities, as the USDA predicts domestic output will rebound to a record. The government is set to release net export sales data tomorrow and update its output forecasts, based on farmer and field surveys, on Aug. 12.
“Favorable weather conditions allow for expectations of a very good harvest, both for soybeans and corn,” Paris-based farm adviser Agritel wrote.
U.S. farmers may harvest a record 13.95 billion bushels of corn, 29 percent more than the prior year, when crops were hurt by drought, according to the USDA. Corn’s 14-day relative strength index remains below 30, a technical signal considered by analysts to indicate that a security is oversold.
Soybeans for November delivery gained 0.2 percent to $11.695 a bushel after earlier touching $11.64, the lowest level for a most-active contract since January 2012.
