September 15, 2011

Russia's wheat wins massive orders from Egypt

Russian wheat won all of a 420,000-tonne Egyptian order amid heavy competition from French grain.

The purchase took to well above two million tonnes Egypt's purchase of Russian wheat since the 2011-12 marketing year began at the start of July.

This time, offers from Romania and Kazakhstan, which have won some business from Egypt's state grain buying, the General Authority for Supply Commodities (Gasc), were absent.

However, against a background of weakened futures prices, Russia required discounts from last week to defend its competitiveness against French grain.

Egypt paid on average US$278.42 a tonne for wheat this time, down more than US$12 a tonne on the price it paid for Russian grain at the last tender, last week.

French wheat, which earlier in 2011-12 was more than US$30 a tonne off Russia's pace, was offered by Cargill at US$283.95 a tonne, although shipping costs are some US$5 a tonne higher on top.

The order follows a decline of some 13% in Chicago wheat prices this month, depressed by improved hopes for world production, against a rapid North America harvest of spring wheat, prospects of rain for the drought-stricken southern US, and a better European harvest than had been feared.

"After the recent fall on world markets it is hardly surprising to see [Egypt] buying on the dips," the UK grain arm of a major commodities house said.