Grain price slump attracts bargain-hunting by importers

File photo of wheat being loaded onto a bulk vessel at port in Russia. (YGrek/iStock/Getty Images)

Hamburg | Reuters — The collapse in grain prices caused by concern about the global impact of the COVID-19 coronavirus has generated some bargain-buying by importing countries, traders said on Tuesday.

But they said the extent was still limited and there were no signs importers were making especially large purchases to expand stocks.

“We are seeing bargain buying this week by countries which need grains and can make big savings by moving into the market,” one European trader said. “But inventories are not being expanded.”

The brisk international grain purchase tender market on Tuesday included Tunisia buying wheat and durum, South Korean buyers NOFI and FLC both purchased corn and Algeria bought barley.

Jordan sought wheat but failed to buy, while Egypt also issued a new tender for soyoil and sunflower oil. South Korea’s NOFI was also in negotiations about buying soymeal.

Chicago Board of Trade wheat futures on Monday dropped to a five-month low, soybeans fell to their lowest in nearly 10 months while corn dropped to a six-month low.

“It is a brisk mix of relatively small bargain-hunting as prices look very attractive,” another European trader said. “But the collapse in crude oil prices also appears to be making oil-producing countries cautious about spending extra money in these dramatic days.”

“I think we will see more of this bargain-hunting for comparatively small volumes of grains in coming days. People still need to eat and farm animals need to be fed despite the coronavirus uncertainties.”

“South Korea is one of the worst-hit countries by coronavirus but its importers are among the most-active grain buyers today.”

A European grain analyst also said he could not see current evidence of new stockpiling by grain importing countries and that some large recent purchases such as the 680,000 tonnes of milling wheat bought by Algeria on Thursday could also be explained by market reasons.

“Algeria made a big purchase for May shipment, but it’s difficult to say if it was because of concern about the coronavirus or as they’ve been running behind in their overall wheat purchases since the start of the season,” he said. “I think it’s more the latter reason.”

— Reporting for Reuters by Michael Hogan, additional reporting by Gus Trompiz.

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