US FOB corn and soyabean export premiums held fairly steady on Wednesday despite a sharp drop in futures prices and weak barge freight, traders said. Wheat futures also tumbled, prompting a tender from Egypt's GASC for up to 60,000 tonnes of wheat for shipment January 5-16.
Egypt is among the largest buyers of US wheat. Traders grew nervous about future US sales after Egypt's government announced it will import 750,000 tonnes of wheat from Kazakhstan. No delivery period was given.
The purchase of 750,000 tonnes comes a few weeks after Egypt arranged a deal for 120,000 tonnes of wheat from Kazakhstan, which grows mainly spring wheat. "My guess is that the Kazakh wheat is for delivery in early 2007 and GASC will continue to issue tenders until it arrives," said a US wheat trader.
Aside from Egypt's tender, export demand was quiet despite the drop in futures prices with most buyers being well covered through early 2007. A wheat tender from Iraq for 100,000 tonnes closes on Saturday but traders are not expecting any immediate results. It usually takes several weeks or months for government officials to finalise a sale in the war-torn country.
Iraq also was having problems with a letter of credit for US wheat the Mideast nation bought earlier this year, traders said. It was not the first time exporters have encountered problems with letters of credit Iraq has provided. In the past, they have been able to ship the wheat eventually, they added.
"There's a few little issues with their letter of credit but they are shipping. They can't get things executed as quickly as they used to," said a US trader who has done business with Iraq.
"They want the wheat. They want to feed their people. They are just trying to survive," the trader said. Corn export demand is slowing and analysts expect US export sales reported Thursday morning to show 800,000 to 1 million tonnes of US corn sold last week, down from 1.1 million tonnes in the prior week.
High prices are deterring overseas buyers but boosting estimates for new-crop plantings, traders said. US corn acreage may rise by 5 million to 8 million acres, and a Chinese think-tank pegged the 2007 crop at 145 million tonnes, up from 142 million tonnes in 2006.