Euronext wheat futures surged on Monday, reaching a seven-week high following a significant wheat purchase by Saudi Arabia, which is seen as a sign that competition from Russia may be diminishing.
Key Highlights:
Market Performance:
March wheat futures, the most actively traded on Paris-based Euronext, closed up 1.5% at 233 euros ($244.84) per metric ton, peaking at 234.00 euros, the highest level since October 25.
Saudi Arabia’s Tender:
The Saudi buying agency purchased 804,000 tons of wheat in a tender, exceeding the initial target of 595,000 tons.
This substantial purchase has drawn attention to the potential reduction in Russian wheat supply.
Impact of Russian Supply:
A German trader noted relief that cheap Russian wheat did not dominate the Saudi purchase, indicating that the Russian government’s efforts to limit export shipments, including implementing a minimum export price, are having an effect.
While a small quantity of Russian wheat was reportedly bought, the primary supplies are expected to come from Romania, Bulgaria, and South America.
Shift in Export Flows:
The news surrounding Russia suggests a potential curtailment of export flows, prompting traders to look towards alternative suppliers, particularly within the EU.
Russia’s government actions to regulate exports aim to stabilize domestic food prices, further tightening supply.
Morocco’s Import Subsidies:
Traders highlighted that Morocco will continue to maintain import subsidies, reinforcing the high demand for wheat in the drought-affected country, which has become a significant market for EU wheat.
Oilseeds Market:
In the oilseeds sector, February rapeseed futures closed down 0.8% at 542.25 euros after last week’s rally, which was fueled by Euronext’s announcement to suspend February deliveries to French river ports due to an accident in Germany affecting shipping routes.
The clearance of blocked vessels by German navigation authorities prompted profit-taking amid a broader decline in oilseed prices.