BMTI Dry Bulk Commodity Overview (26 Sep 2019)

wheat fieldEuropean wheat prices have remained relatively flat in the past week, even having gained some sentimental support from indications that Morocco will begin its importing season in October. Morocco said it plans to reduce its customs duty on soft wheat imports to 35% from a previous 135% starting on 1 October, which analysts say strongly indicates plans to begin grain imports in Q4, especially as Morocco’s own domestic grain output has fallen sharply short of expectations. French wheat exports are especially enthusiastic about the prospect of new Moroccan import demand. German producers were less opti­mistic as Baltic-sourced wheat exports are tradi­tionally rare to secure trade into North African mar­kets. French milling wheat for December is steady at about EUR 171.5/mt on Euronext trading in Paris, remaining under the recent one-month high of EUR 172/mt reached a week before. German bread wheat (12% protein) for September ex-Hamburg is trading at EUR 2.5/mt below the French wheat contract.

European fertilizer markets have remained fairly steady in recent days with demand nonetheless seen returning in September while being overly supplied with producer offers, thus leading to a modest downward trend in DAP prices in NW Europe. Spot prices for DAP in Northwest Europe are currently trading at about EUR 358/mt FCA, traders say, which is around EUR 2-3/mt lower than a week before while French buyers are said to be importing at CFR prices of US$ 355/mt. DAP producers say that they expect to see demand improve in October. A number of ammonia parcels have been sold to Turkish buyers in recent days at prices of up to US$ 228/mt FOB, according to Black Sea traders, who also verified at Trammo parcel at US$ 225/mt FOB. Ameropa is reported by Fertilizer Week to have concluded ammonia supply contracts at prices with netbacks at the equivalent of US$ 220/mt FOB. The EU has just launched a probe to investigate grounds for a potential reinstatement of anti-dumping duties on Russian ammonium nitrate (AN) for another five years after a request was submitted by industry agency Fertilizers Europe. The duties, intended to protect EU AN-producers of from unfair pricing (dumping), were charged at up to EUR 33/mt and were originally set to stop from 25 September. Now, with the new EU investigation underway, these AN duties are to stay in place until a decision is made.

Futures for thermal coal on European markets have been unresponsive to fluctuations in global crude prices, traders note, with ARA-based prices for Cal-20 rising only to US$ 70.25/mt CIF after opening at US$70.00/mt at the end of last week, despite shockwaves in energy markets after Saudi Arabia lost half of its crude production following attacks on its Abqaiq facility. Traders say this indicates the general sluggishness of EU coal trading at the moment with coal fundamentals judged as “too weak” for any long term impact on the physical market.

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