Algeria purchased up to 870,000 tons of wheat at a price $20/ton lower than in May, increasing pressure on the market for the new crop

The Algerian state grain agency OAIC held an international tender on June 17 to purchase at least 50,000 tons of milling wheat of any origin. According to estimates by European traders, the actual purchase volume was about 800-870,000 tons at a price of $264-265/ton on a C&F basis.

Market participants believe that the bulk of the purchased wheat will be supplied from the countries of the Black Sea region, in particular from Romania, Bulgaria, Ukraine or Russia.

According to the terms of the tender, deliveries of wheat of European or North American origin should take place during the periods August 1–15 and August 16–31. For grain from South America, India or Australia, the shipment dates are provided for a month earlier.

The market paid particular attention to the significant decrease in the purchase price compared to the previous tender. The purchase price was $20–23/t lower than in May.

Recall that on May 20, OAIC purchased about 200 thousand tons of milling wheat of any origin at a price of $284–292/ton C&F. Delivery under that tender was scheduled for the periods July 1–15, July 16–31, August 1–15, August 16–31, September 1–15, and September 16–30.

The sharp decline in prices at one of the largest import tenders in recent months confirms the growing competition among exporters of the new crop and indicates increasing pressure on the global wheat market.

In Ukraine, this is already reflected in the prices of the new harvest. Purchase prices for food wheat for delivery in July-August have recently decreased by $4–5/t to $214–215/t for delivery to Black Sea ports.

Prices for feed wheat of the new harvest fell even more, losing $10–12/t and dropping to $202–204/t with delivery to Black Sea ports.

Given the active start of harvest in the Northern Hemisphere countries, sufficient grain supply and weak demand from major importers, the new crop market remains under pressure, and competition for export markets continues to intensify.