The durum wheat market has been turned upside down

to Yannis Tsatsakis, Giorgos Roustas

Developments in the durum wheat market have taken the form of an avalanche over the past 24 hours, with data changing almost hourly to spread, after a while, smiles among producers.

An increase of €50/ton for the first two quality classes and €30/ton for the third registered in the new Foggia list indicates climate change, which was immediately reflected in the Greek market with price adjustments. Just a few hours ago, the agricultural cooperative in Platycampos agreed with the Balouka Brothers.

On first reading, the recent Tunisian bid where, as “YX” wrote in the previous paper, the average price was about 36 euros/tonne higher than its predecessor in May, it seems to have lit the fuse.

At its core, however, the driving force behind the rally is the inability of millers in Italy and Greece to guarantee the qualities they desire, with crops in both countries having deteriorated largely due to bad weather this year. This means that good, “free,” rare and hard-to-find wheat will pay well, with its price, according to executives with market experience, close to the contract price.

But the “wave” also oscillates along the lower qualities, which the 23-24 minutes under discussion a few weeks ago belonged, as it all seems, to the past.

The scene has been calmed by the rising price of Canadian durum wheat, which no longer seems affordable, even if the selection of several mills seems like a one-way street, to “correct” the qualities of European wheat.

Jump to Fujiya

Since the early morning of Wednesday, July 12th, there has been a strong rumor in the market that Fujiya is going to “write” a significant rally. There was also a feeling that the main market of southern Italy “owed” something to last week and, due to timing, did not have time to reflect Tunisia’s results there. The interesting fact is that in this perspective, the Millers’ camp was not opposed, in fact, quite different.

The rumors are confirmed, as the price is set in the list published a few hours later (warehouse in the car) for the first quality category (minimum specific gravity 78 kg / h, vitrified 70%, protein 12%) at 380-385 euros. / ton (from 330-335 € / ton one week before) and for the second category (specific weight 76 kg / ha, vitreous 50%, protein 11%) at a price of 370-375 € / ton (from 320-325 € / ton).

Up to 15 euros more for export

In the third quality category (specific weight 74 kg/l, vitreous 30%, protein 10.5%) prices were also raised, but by 30 euros, with the result that they are now 335-340 euros/tonne (from 305-310 euros/tonne).

The large mass of domestic volumes destined for export also “settles” into this category, which new data now justifies a price of around €300/ton FOB compared to the €285-290 €/ton FOB given until recently. It should be noted here that, according to market sources, in the field of export so far, approximately 165 thousand tons of Greek durum wheat have been certified at an average price of 290 euros / ton and a large part of them has already been implemented.

The vast majority of these are wheat offered by farmers at an open price, effectively leaving many traders exposed that, when they closed the deals in question, had prices in the range of 23-24 cents for these qualities of the product.

For Greek wheat approaching Class II Foggia, there was interest from Italy in the period prior at €320/tonne FOB, but no sellers were found, as there was uncertainty as to whether the expected qualities would ’emerge’. As for the scarce local wheat, which does not exceed 10% of this year’s crop, according to the estimates of the market players and mentioned by “YX” in the previous paper, everything indicates that there will be a battle between the mills and the commercial ones. The companies cooperating with it are “shops”, and their prices are now “three times higher”, bridging the gap with the contract companies which, as is known, and if they meet quality standards, are paid no less than 35 cents/kg.

Bologna also followed Foggia’s pattern on Thursday, with the first quality category winning €25/ton and the rest €12/ton.

In 32 minutes Platicampo Palluca Valley

Characteristic of the new associations but also … the combustible climate that has formed in the Greek market is the agreement (the first at the level of cooperatives in the Thessalian plain) for agricultural cooperation in Platykampos with the trading house of Paloka Brothers. Initially, as announced on Wednesday, the deal called for durum wheat at 29 cents a kilogram for the co-op and 27 cents for the producer. After Fujia’s “mandates”, the price was revised to 32 cents/kg at the cooperative and 29 cents at the product level. As the head of the cooperative, Yiannis Koukoutsis, told YX, “Seeing the market price rising and understanding the need of the product to cover the increasing cost of cultivation, we set out to amend our initial agreement with Mr. Baloukas.

This is a development that honors the merchant and testifies, in the best way, that the cooperative monitors developments daily, listens to the voice and pains of the producers and fights for their interests. I think with our agreement we have been able to wake up a market that has been sluggish until now.”

It should also be noted that the agreement relates to the entire stored quantity of durum wheat, which is about 5,000 tons, without separating the quality (before rains, and after rains). At the same time, the same trading house sold 2,000 tons of barley (also without quality separation) at 17 cents a kilogram for the co-op and 16 cents for the producer.

Canadian up to $470

The upward trend in prices is supported, as mentioned above, by increasing prices for Canadian durum wheat, with the export price currently at $425 per ton FOB, which “translates” to $470 per ton CIF in Italy or, at today’s exchange. At a price of 420 euros / ton.

Within the next two to three weeks, a clearer picture of the North American country’s harvest is expected to form. Currently, the prevailing drought in several producing areas has lowered expectations in terms of yields, with the result that the latest estimate puts the new crop at 5.6 million tonnes, the same rate as last year.

Durum wheat price in Foggia *

* At the merchant’s store (EUR/ton).

** For special weights from 71 to 74 kg / hl the price is reduced by 5 € / ton,
As for special weights less than 71 kg / hl, the price reduction is up to 10 € / ton