US wheat dominates export markets
The US is expected to dominate the international wheat market until the end of the year as the weak dollar makes the country’s exports the cheapest in the world, Rabobank said.
Previously the world’s most expensive wheat producer in the first half of the year, a recent slide in the dollar means US suppliers are now more competitive than their European counterparts despite higher freight costs, the bank said in its latest monthly report.
Traders have become downbeat about the prospects for European Union wheat in recent weeks due to a tail off in demand due to waning supplies and high prices.
Exports from the bloc started at near-record levels this week as suppliers scrambled to secure demand after Russia banned grain exports for the year.
This week Egypt, the world’s biggest wheat importer, bought 110,000 metric tons of US wheat at $279.80/ton, compared with 120,000 tons of French wheat at $296.06/ton in a move that market participants said signalled the increasing dominance of the US in export markets.
Cheap dollar
The dollar has been hovering around its lowest level against the euro since January and hangs around $1.39.
Rabobank said it expects prices to remain range bound in the coming months before Southern Hemisphere suppliers begin to make their way into the market.
"We expect prices to remain supported in the current range given the tight underlying fundamentals and declining exportable surpluses, particularly in Europe," the bank said.
"Supplies from the Southern Hemisphere may create some pressure on prices with a large Australian east crop looming. This, however, would be unlikely to have any material impact until the first quarter of 2011."
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