Global wheat markets seem to be well supplied

US wheat futures fell to new lows today not seen since 2012. Some had hoped wheat prices would stabilize as Egypt, the world's largest wheat buyer, entered the market.

WSJ: – Egypt's less-frequent purchases has been a reason why wheat futures were one of the worst-performing commodities of 2013, when they slumped 18% on the year.

Analysts are now optimistic that prices are low enough to mean the North African country will continue ramping up its purchases this year in a bid to avoid public discontent with food shortages.

At the weekend Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, bought 535,000 metric tons of Ukrainian, Russian, French and Romanian origin wheat at an average price of $317 a ton. This is one of the North African country's biggest purchases in the international market in recent years, topping a 475,000-ton Black Sea order in September 2012 and a 420,000-ton purchase of Russian wheat a year before.

Another factor providing support for wheat in recent days has been the frigid weather in the US, which may pose risks to dormant wheat in the Midwest (see story).

Nevertheless the March-2014 CBOT wheat futures declined some 1.4% today.

March 2014 whet futures

It seems that increased production in Canada and Australia may keep the global markets well-supplied. Stronger dollar due to better than expected ADP employment report today (see story) is not helping overall commodity prices either.

Note: Here is an interesting article discussing how low wheat and corn prices could be damaging to some Republican candidates in the upcoming elections.