A reduction in the risk premium that wheat merchants are demanding in trades with Egypt lured the country’s Gasc grain authority to make its biggest purchase of the grain in three months at tender.
Egypt, the world’s biggest wheat importer, has also purchased 30,000 tonnes of US hard red spring wheat – the first purchase of the high-protein variety since 2010, separate data showed.
Gasc said it had bought 240,000 tonnes of wheat – 60,000 tonnes from France, with the balance from Russia, its biggest order since October.
The purchase follows a furore over the country’s rejection of cargos and French and Canadian wheat over contamination with ergot, amid talk from some officials that Egypt had adopted a zero tolerance policy over the fungus.
Confusion over the specifications has prompted a stand-off by merchants, which have either steered clear of sales to Egypt, or offered above-market rates, prompting Gasc to cancel three of its previous four tenders, while ditching rice and soyoil tenders too.
Price reductions
However, after Egypt earlier this week issued written confirmation of its specifications, the price offered to Gasc for Friday’s wheat tender appeared to include less in the way of risk premium, even if the number of cargos offered, at five, was well below typical levels.
However, Soufflet, the French merchant, on Friday sold Gasc wheat at $183 a tonne, a $3.62-a-tonne reduction on the price it was offering a week ago.A tender before Christmas, for instance, received offers of some 20 cargos.
Russia’s Union Co, which was last week offering Gasc wheat at $191.91 a tonne, this time won business with prices of $187.90 a tonne.
Wheat futures on Chicago’s benchmark futures market have risen by 1.0% over the same period.
US purchase
The purchase of US spring wheat was revealed in separate data, from the US Department of Agriculture, giving the country’s crop export sales last week.
Extra shipping costs across the Atlantic have historically tended to rule the US out of considerable business with Egypt, except in years of weak global availability.
However, the fall in shipping charges to record lows, as measured by the Baltic index, have reduced the US’s geographical disadvantage at a time when Egypt appears to have some immediate requirement for the grain.
The cargos Gasc purchased on Friday were for delivery March 15-25.
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