Should wheat buyers stick or twist?
Algeria’s OAIC grain authority this week opted to hold, in terms of accepting wheat offers to its latest tender, and bought 510,000 tonnes of the grain.
Sure, the $368 per tonne it paid, including shipping, for the order was far higher than OAIC would have paid historically.
But it was below levels above $380 per tonne it forked out last month, and indeed in November 2, when it bought a monster 800,000-tonne order for some $383 per tonne.
New cards please
Egypt’s Gasc, however, chose to try its luck.
It rejected offers – all 27 of them – to its tender this week, despite many of them being pitched at a similar level to those accepted by Algeria.
Gasc walked away after reportedly trying, and failing, to get the offers down to $360 per tonne including shipping.
The authority is expected soon to return and ask merchants for fresh offers.
However, will these offers be any better?
Gasc’s bet is so far working in its favour.
Chicago wheat futures as of Wednesday’s close took losses for the week nearly to 5%, depressed by factors including an unexpected upgrade by the US Department of Agriculture, in its Wasde report, to the forecast for global stocks of the grain as of the close of 2022-23.
Reading this through to physical markets would suggest offers below the $360-per-tonne mark.
Saudi steps in
Still, Gasc might not want to wait too long before returning to the table.
Wheat futures turned a little upwards on Thursday after the Rosario grains exchange cut further its forecast for Argentina’s wheat harvest, to a seven-year low of 11.8m tonnes.
The clamour for short bets in wheat signalled by vital signs in the last session’s trading, when a price fall co-incided with a marked rise in open interest, appears to have run its course for now.
Other wheat buyers have returned to the market, with Saudi Arabia and Tunisia seeking offers.
Gasc might, unless it is very confident in its wheat stocks, want to follow suit, if only after seeing what these other tenders turn up.