The global financial crisis may reduce the number of purchase tenders in the global grains market in coming weeks as buyers hope for more commodity price falls, traders and analysts said Oct. 8.
A major increase in tender activity in the international grains market had been expected this week following the end of the Ramadan fasting period in Islamic countries, among the main grain importers.
But so far activity has been subdued.
“Buyers are observing that grain and other commodity prices are being pulled down by the financial crisis and seem to be waiting to see how far prices will fall before tendering,” one trader said. “Simply delaying by a few days can mean hundreds of thousands of dollars saved in the current market.”
Andrei Sizov Sr., chief executive officer of Russian agricultural analysts SovEcon, said, “I don’t think that with the end of Ramadan importers from Islamic states will boost their activity.
“They will probably be buying relatively small volumes of grain on the falling market at market prices and will not be building stocks. The developing liquidity crisis will be an additional stimulus for such a policy.”
Meanwhile, traders said Russian and European Union wheat was seen as favourite to win upcoming wheat tenders.
The euro’s fall against the dollar in past weeks has substantially increased the competitiveness of EU grain in export markets, traders said.
“In the last couple of weeks, German wheat has become about US$18 a tonne cheaper simply because of currency movements,” one trader said. “French wheat is also much more competitive than in the summer. The main competition is likely to be against Russia in coming weeks.”
Another trader added, “Ukraine has relatively small supplies of milling wheat available this season and has already sold a lot. The main contest looks likely to be between Russia and the EU in coming weeks.”
–Additional reporting for Reuters by Aleksandras Budrys