Most of the attention during this year's bull market has gone to corn and soybeans, because the U.S. wheat crop largely escaped the ravages of the 2012 drought. End users around the world also seem to be ignoring their purchases, with a series tenders cancelled as prices rose.
Now buyers appear to be coming to grips with the situation. Not only are wheat prices likely to stay relatively firm due to the rally in corn and soybeans, but global wheat supplies are tighter too. Lower production in Ukraine, Russia and Kazakhstan will limit sales out of the Black Sea, while persistent rains in Europe could hurt quality there. Output is also expected to be less in Argentina and Australia, though the overall world situation isn't as dire as it was back in either 2008 or 2010.
USDA this morning reported weekly sales of 21.7 million bushels, nearly doubling the total from the previous period and well above trade guesses. Regular customers in Asia and the Americas were in lineup, with several taking multiple loads.
While Egypt, the world's biggest buyer, has yet to reenter the market, its timing could be accelerated too if reports some sellers were washing out sales prove to be true. Other end users appear to be stepping in: Taiwan purchased 1.6 million bushels from the U.S. today, while Tunisia booked 4.6 million bushels of optional origin.
Soybean sales fell to 15 million bushels this week, with about a third of the total still old crop. China continues to book 2011-12 soybeans taking more than three loads in the latest week. USDA also separately announced the sale of another 4.1 million bushels of new crop to the U.K. under its daily reporting system for large purchases. Soybean meal sales are also brisk, with less available from South American crushers after the drought in Argentina and Brazil earlier this year.
High prices continue to ration corn demand, with only 1.25 million bushels of net new bookings in the latest week as basis-fixed purchases are cancelled. CIF basis at the Gulf dropped 25 cents earlier this week from July highs, though it has firmed 13 cents since. Total old and new crop sales were just 7.1 million bushels. China is still shipping out previous purchases of U.S. corn, though it did cancel a small amount this week.