In the last week, Egypt’s grain import authority, GASC, has tapped the global grain market with two separate tenders for wheat, amounting to a combined 480,000t. Last week, Egypt bought 180,000t of Ukrainian and Russian wheat at a price range of $172/t and $173.5/t, including shipping.

GASC followed this by snapping up an additional 300,000t of Romanian and Russian wheat over the weekend at a slightly higher price of $175/t delivered.

While this is just the very start of the 2016/17 buying season for Egypt’s vast grain import programme, it is notable that no French wheat was offered for the tender amid concerns over crop quality in Europe after prolonged periods of wet weather and heavy flooding in many parts.

Indeed, the French agriculture ministry has estimated a 10% decline in French wheat production this year to 37m tonnes as a result of poor harvest yields. Even more telling is the fact that only 59% of French crops have received a rating as good or very good at the start of July by the agriculture ministry – the lowest level since 2011.

Market mover

Importing 11m tonnes annually, Egypt is the world’s largest buyer of wheat and it has a significant bearing on market sentiment.

For example, Egypt sent grain markets tumbling earlier this year in January and February when the country’s grain import authorities rejected a number of wheat shipments on the grounds that they contained too high levels of ergot, a naturally occurring fungus in wheat.

Wheat with traces of ergot up to 0.5% is generally accepted internationally but Egypt’s agriculture ministry wanted to implement a zero-tolerance policy on ergot contamination.

And while the import stand-off between Egyptian authorities and grain traders over ergot levels now appears to be resolved, grain quality remains an issue for Egyptian importers, meaning French and European grain exporters are exposed.

The flooding and wet weather means crops on the continent are at a higher risk of fungal diseases this year, which could lead to a decline in grain exports, despite France traditionally being one of the main suppliers of wheat to Egypt.

Added to this, the weakness of the Russian and Ukrainian currencies makes shipments from the Black Sea region much more attractive for Egyptian buyers.

Europe

On the Euronext exchange (MATIF) in Paris, prices have remained subdued in the past week as weather continues to dominate market sentiment. The lack of any French wheat shipments to Egypt has not helped prices either.

December 2016-delivered milling wheat lifted slightly during Monday’s trade to sit at €165/t, while December 2017 wheat finished at €179/t. Maize (corn) prices from Paris weakened sharply on Monday, with November 2016 maize down €3/t to €163/t, while November 2017 maize finished below €176/t.

Rape prices remain steady, with November 2016 rapeseed at €363/t, while November 2017 rapeseed finished below €362/t.

Chicago

In Chicago (CME), markets continue to wait for more definitive weather updates on the forecast hot spell for the US Midwest.

December 2016 wheat gained $2/t on Monday to move to $167/t (€151/t), while December 2017 has risen to $195/t (€176/t).

Chicago corn prices also up slightly in the last week with December 2016 corn at $143/t (€129/t) and December 2017 corn finishing Monday’s trade at $152/t (€137/t).