March 29, 2012

 

Argentina wins Egypt's first wheat order

 

 

Despite higher transport costs, Argentina affirmed its reappearance as a price leader in wheat shipments by winning its first order from Egypt's state grain authority of 2012, undercutting Black Sea, European and, most, US stocks.

 

Egypt's General Authority for Supply Commodities (Gasc) revealed that, after its third tender this month, it had bought 60,000 tonnes of Argentine wheat, and 60,000 tonnes of the grain from the US.

 

Argentine wheat narrowly missed out at the last tender, two weeks ago, by Gasc, the world's biggest wheat buyer.

 

Victory this time meant a cut of US$5 a tonne to US$259.35 a tonne in the winning Argentine offer, from agribusiness giant Cargill, more than making up for the extra cost of shipping to Egypt from South America.

 

Indeed, Argentine wheat was considerably cheaper than French supplies, of which the only offer came from Glencore at US$300 a tonne, excluding freight, boosted by fears for the impact of last month's European cold snap and on-going drought on supplies.

 

"European origin [wheat] is not competitive for now as prices have risen much more than in other places since the end of the cold wave," Agritel, the Paris-based consultancy, said. "Frost damage seems to be more important than initially estimated in Europe with damage in Germany that wasn't taken in account until now."

 

Argentine wheat was also cheaper, excluding freight, than the US supplies which have been the price leader for most of 2012.

 

Furthermore, it undercut the Black Sea wheat which set the pace for the last half of 2011, but was offered from Ukraine at US$277.26 a tonne and Russia at US$280 a tonne.

 

Russian prices have been lifted by the depletion of supplies next to port, and Ukraine's by the prospect of a poor winter cereals crop following a dry autumn and February freeze which has prompted farmers to hang on to supplies in expectation of a local market squeeze.

 

Nonetheless, Russia's deputy prime minister, Viktor Zubkov, said separately that Russian grain shipments would hit 26-27 million tonnes in 2011-12, a figure which, with shipments at 21.4 million tonnes by the end of last month, implies a solid rate of trade for the rest of the season.

 

"If we are able to reach these volumes, and I think it's absolutely achievable, we will become the second-largest wheat exporter in terms of volumes after the US," Zubkov said.

 

Separately, Prime Minsiter Vladimir Putin pegged grain shipments in 2012-13 at 25-27 million tonnes.