October 5, 2012


Argentina takes over Russia as cheap wheat supplier


As a result from a tender by Egypt, supplies of competitive Russian wheat appear to have run dry, but wheat prices remained in negative territory on major markets after the tender also showed that Argentina, another supplier of cut-price wheat, is getting in on the act.


The latest tender from Egypt's state grain authority, Gasc, at first sight provided a dollop of good news for Western wheat exporters in attracting, for the first time in 2012-13, no offers from the Black Sea.


The region is usually renowned for its competitive supplies, and Russian wheat in particular dominated Gasc orders up to late September, when the impact of a drought-hit harvest began to strike.


Russia's weak harvest has, besides raising prices, raised fears that Moscow will place curbs on grain exports.


"Notably there were no Russian offers for the Egyptian business," grain traders at a major European commodities house said.


"At the moment the government over there do not need to intervene in terms of an export ban, the price is doing the job for them."


Meanwhile, US shippers had the extra boost of seeing soft red winter wheat offered as low as US$340 a tonne, excluding transport, enough to undercut French supplies were it not for the extra costs of shipping to Egypt across the Atlantic.


In fact, French wheat accounts for 180,000 tonnes of the 240,000 tonnes that Gasc purchased. However, US wheat could not compete with Argentine supplies, offered as low as US$333.68 a tonne, excluding freight, to win their first orders from Gasc so far in 2012-13.


"As one door to cheap wheat for Egypt is closing, another one is opening," a UK grain trader told Agrimoney.com.


"For the US, it all sets back the horizon when they will get in on the unusual markets for them, in the Middle East and North Africa that they need to give their exports that extra oomph."


The USDA is forecasting a 13.4% rise to 32.7 million tonnes in US wheat exports this season. On international markets, prices recovered some ground to trade above intraday lows. However, Chicago wheat remained in negative territory, down 0.3% at US$8.69 a bushel, in lunchtime deals.


Paris wheat for November closed down 0.5% at EUR258 (US$335) a tonne.

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