Egypt has rejected a vessel containing 63,000t of Russian milling wheat based on quality issues and excessive bug contamination. Egypt is one of the largest grain importers in the world and requires 8.2mmt annually. Russia meets nearly 50% of Egypt?s grain needs and has been steadily displacing more expensive French and US grain. But these quality issues with Russian wheat may be opening doors to exporters with stricter quality controls. Egypt has adopted US quality controls to ensure they?re receiving grain fit for human consumption, whereas numerous nations, including Russia, do not impose such checks. Quality towards the end of an export campaign can tend to get a little more problematic and this seems to be the case in this instance. There are two other similar size vessels loading and at least four vessels waiting so exporters are a little ?nervous?. The Egyptian Government finances a bread program that feeds three quarters of the Egyptian population; hence the importers need to find cheap, edible wheat. The Russian?s are no strangers to rejected wheat vessels with Egypt turning back 4 loads in the last two years. The scale of Egypt?s wheat purchases (about 8-10% of the global wheat trade) has a significant influence on the world grain trade. If Russia cannot adequately service their demand then Egypt could turn to other export markets. This would provide some bullish fundamental news and potentially create upward price momentum.

In what is the best fundamental news that the grain complex has seen for a while, Russia's grain crop could fall by up to 9% in 2010 as the late spring leads to lower winter grain yields and a smaller spring grain area, said SovEcon. Russia could harvest 88-89mmt in 2010, down from last year's crop of 97mmt. SovEcon's previous forecast for the 2010 crop from November was 90-98mmt. SovEcon expects Russia's total wheat output, including winter and spring wheat, to decline this year to 56mmt from 61mmt last year. The long period that winter grain plantings have spent under snow will have a negative influence on their condition. A delay to the start of the spring sowing would prevent farmers from sowing early spring grains, primarily barley. Instead they may favour crops, like oilseeds and sugar beet, that take less time to develop.

More quality problems are being reported from the nth NSW sorghum harvest, with high trash and poor colour being the issues. Of the sorghum coming into Goondiwindi from NSW origins, Sor 2 is prevalent. Small volume buyers are working with the sellers to accommodate these defective loads, at discounts not disclosed. It will be when there is an increase in rejections from the larger end users that this market may react to the problem. The defects of sprouting, light weight appear to have affected the largest proportion of the crop, which will make blending more difficult. Delivered NSW destinations appear to be weaker than Sth Qld, with Narrabri grain looking to go north. Grower selling is limited until they can get back into paddocks - which, by the look of the forecasts, should be this week.