South Africa made its biggest purchase of U.S. wheat in nearly five years last week, U.S. Department of Agriculture data showed on Thursday, as drought reduced African grain output and low prices made U.S. supplies attractive in global markets.
USDA said South Africa bought 45,000 tonnes of hard red winter wheat, a variety used primarily for milling bread flour. The sale, for delivery during the upcoming marketing season beginning on June 1, was the first purchase of that variety since 2012 and the largest one-week sale of any variety of U.S. wheat since the week ended July 14, 2011.
“It’s unusual and interesting,” one U.S. trader said. “HRW (wheat) is quite price competitive, and will garner business.”
Traders have been looking for signs of increased grain imports in South Africa, with the El Niño weather pattern contributing to blistering drought that was likely to cut their maize harvest by 30 percent and winter wheat crop by 18 percent.
K.C. July wheat futures, which reflect the approaching U.S. winter wheat harvest, tumbled to a contract low of $4.41-1/4 per bushel last week, enticing some buyers. Total sales last week of U.S. HRW wheat for shipment in the 2016/17 season were 293,932 tonnes, a marketing season high.
U.S. hard wheat export premiums have gained as demand improved, and as rains in U.S. growing regions could potentially delay the earliest phases of the harvest.
South Africa could purchase more high-protein wheat if prices stay low, another U.S. wheat trader said. “It’s a one-off sale for now,” he added.
Source: ReutersPrevious Next
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