CHICAGO (Reuters) - U.S. wheat export sales last week beat trade expectations for a second week as consumers scrambled to lock in supplies amid a drought slashing the crop in Russia, which on Thursday banned exports, traders said.
Russia’s ban on wheat exports, from August 15 to December 31, to put a lid on inflation could dent the country’s credibility as a reliable global supplier of the grain, the traders added.
“The negative implication of doing this (ban) is that it could take years to rebuild your credibility as a reliable supplier,” said grains analyst Shawn McCambridge of Prudential Bache Commodities in Chicago.
He said importers like Egypt that depend heavily on Russia for wheat supplies have begun to buy U.S. wheat as insurance. But, he added, there has been no panic buying yet.
Traders said a sharp drop in cash market prices for soft red winter wheat -- they type traded at the Chicago Board of Trade -- was evidence of the absence of any panic buying.
SRW wheat basis bids for September shipment in the cash market tumbled 30 cents a bushel after CBOT wheat futures surged on Thursday. It was the biggest one-day drop since November 2009 for a second-position contract.
The U.S. Department of Agriculture said on Thursday export sales of U.S. wheat last week totalled 854,600 tonnes, up 61 percent from the prior four-week average and above trade estimates for 600,000 to 850,000 tonnes.
Last week USDA pegged wheat exports at 919,900 tonnes, the highest in six weeks.
PUTIN ANNOUNCES RUSSIAN WHEAT EXPORT BAN
Russia Prime Minister Vladimir Putin on Thursday announced a temporary ban on grain exports to keep inflation in check, pledging billions of roubles to the farm sector.
“The ban is going to have a positive impact on U.S. wheat,” said economist Bill Nelson of Doane Advisory Services in St. Louis, Missouri.
News of the ban fired up the already red-hot CBOT wheat futures market, with the September contract rising as much as the daily trading limit of 60 cents to $7.85-3/4 a bushel.
It was the highest for a spot contract in 23 months on the continuos chart. The spot contract has risen a whopping 85 percent from lows in June due to the Russian drought.
Among the notable buyers of wheat in the USDA report was Egypt, which booked 110,000 tonnes of U.S. hard red winter wheat. That added to the 95,200 tonnes the country had purchased in the prior week, USDA data showed.
Egypt, a top buyer of U.S. wheat, had drifted into the arms of Russia over the past few years, lured by low prices. On Wednesday, Egypt’s main government wheat buyer booked 180,000 tonnes of Russian wheat.
The country bought a similar amount from Russia on July 31.
Traders said Egypt was back in the U.S. wheat market amid concerns of possible defaults in delivering Russian wheat following the sharp rally in prices.
Reporting by K.T. Arasu; Editing by Walter Bagley
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