July 14, 2011

Philippines buys 75,000 tonnes of Russian wheat

Feed millers in the Philippines bought 75,000 tonnes of feed wheat in a tender this week, expected to be the first sale of Black Sea wheat into Asia since last year's drought cut supplies.

The wheat cargo was traded around US$265 a tonne, including cost and freight, to be delivered from optional origin, two traders familiar with the deal said on Wednesday (Jul 13).

"The tender says optional origin but it is incredibly cheap prices, which can only come from the Black Sea region," one trader who participated in the tender process told Reuters. "Canadian and Australian feed wheat are priced much higher than Russian and Ukrainian origins."

An industry source in Manila confirming the deal said that Glencore won the tender for feed wheat, which will be delivered in two shipments, with the buyers being hog and poultry raisers.

Australian and US wheat suppliers are facing stiff competition from Russia as it resumes grain exports this month after a severe drought that cut supplies for almost a year.

Jordan purchased 150,000 tonnes of Russian hard wheat earlier this month, marking the first major success by Russian wheat following the end of the country's grain export ban on July 1.

In more recent deals, Egypt, the world's largest wheat importer, bought 180,000 tons of Russian wheat, and Tunisia took 100,000 tons of soft milling wheat of optional origin, which traders again believed to be from the Black Sea region.

The Philippines had turned to Australia for feed wheat supplies in the first half of the year due to lack of supplies from traditional feed wheat exporter Ukraine. Feed millers paid around US$280-295 a tonne for Australia wheat in recent deals.