French wheat won half of Egypt’s tender as a weakening euro boosted its appeal for overseas buyers just as government purchases made grain from main competitor Russia more expensive.
Egypt, the world’s biggest wheat importer, bought 120,000 metric tons of French wheat, or half of the supplies purchased in Thursday’s tender, according to state buyer the General Authority for Supply Commodities, or GASC. The euro is near a three-month low against the dollar, boosting the attractiveness of grain from France, consultants at Agritel wrote in a report.
While Russian wheat has dominated Egypt’s tenders since the season started in July, offers for the nation’s grain weren’t among the most competitive including freight, according to two traders involved in the tender who asked not to be identified because they’re not authorized to speak to the media. Russian wheat is being offered at a higher price as the government started paying more for its purchases, said Igor Pavensky, deputy marketing director of Moscow-based grain carrier Rusagrotrans.
"That’s a surprise," Swithun Still, director of Solaris Commodities S.A., said by phone from Morges, Switzerland, commenting on Egypt’s French wheat purchases. "I thought they would hold out for cheaper Russian offers next tender."
Egypt bought two cargoes of 60,000 tons of French wheat, one from Groupe Soufflet at $211.76 a ton including freight and one from Bunge Ltd. at $209.86 a ton, according to GASC and two traders familiar with the tender. It also purchased the same amount of Polish wheat, from Archer-Daniels-Midland Co. at $209.17 a ton, and Romanian grain, from Ameropa AG at $206.86 a ton.
Egypt has acquired 1.4 million tons of Russian grain in tenders in the 2015-16 season, compared with less than 350,000 tons each from Ukraine and Romania, Bloomberg calculations show. Prior to Thursday’s tender, GASC had bought just one cargo of supplies from France.
The euro has fallen relative to the dollar over the past month. While wheat from the Black Sea region benefited from lower freight costs in recent tenders, prices are on the rise in Russia due to government purchases.
Exporters "have to bid with higher prices to make sure they have some profit margin," Pavensky of Rusagrotrans said by e- mail.
The cheapest offer for Russian wheat in Egypt’s tender was from Cargill at $204.50 a ton excluding freight. That was 3.5 percent more than the lowest offer for french wheat excluding transportation costs.
Russian offers are likely to be slightly lower than the ones seen in today’s tender next time as the ruble is weaker and there are some "more active" sellers for delivery in December, Still of Solaris said.