Grain market steadies after pullback, Egypt seeks more wheat

Chicago grain and soybean futures edged higher on Tuesday after a two-day pullback as technical support and weather disruption to crop supply underpinned the market despite an improvement in growing conditions in the drought-stricken US Midwest.

Wheat, which shed six percent in the past two sessions, was also supported by the second tender in a week by Egypt, the world's top wheat importer, in a latest sign that buyers were returning to the market.

Grain markets have surged since June as the worst drought in half a century in the United States has withered corn and soy crops, and supply concerns remain intense despite a cooling in prices since Friday when operators decided to book profits after closely watched US government crop estimates.

The G20 group of countries could hold an emergency meeting next month depending on the gravity of the situation, France said on Monday, as it seeks to put into practice pledges made last year to curb volatility in food markets.

Debate over use of corn for biofuel ethanol, which absorbs about 40 percent of the US crop, is coming to a head, with the chairman of food manufacturer Nestle adding his voice to calls for crop-based biofuels to be curbed.

Chicago Board of Trade new-crop November soybeans rose 0.7 percent to US$16.12 a bushel by 1042 GMT after sliding 2.6 percent in the previous session.

December corn added 0.9 percent to US$7.99-1/2 a bushel and December wheat gained 0.8 percent to US$8.882-1/2.

In Europe, November milling wheat in Paris was up 0.3 percent at 258.00 euros a ton.

"People aren't really more bearish than before, there has been some profit-taking in Chicago, particularly in soybeans," a European trader said.

"Everyone agrees that we're facing a year with a pretty tight supply balance and some high prices."

The technical support levels on futures markets also helped the market steady after the two-day pullback, traders said.

The easing in international prices has encouraged wheat importers to come back into the market, with Egypt holding on Tuesday its second tender in less than a week and Algeria at its third milling wheat tender in as many weeks.

Egyptian state buyer GASC already bought 120,000 tons of Russian wheat at the weekend and traders said it was moving to secure competitively priced wheat from Russia with the country expected to have a small export surplus this season after a drought-affected crop.

There has been persistent market speculation in the past month that Russia could curb exports to preserve supplies, as it did in 2010 when its crops were devastated by a drought, although the country has ruled this out for the moment.

Related Articles

Back to top button