The U.S. is getting a chance of selling wheat to Egypt as the world’s biggest buyer tenders today. For France, the outlook isn’t so promising.
U.S. wheat represented two of the five lowest offers to Egypt including freight, according to two traders involved who asked not to be identified because they’re not authorized to speak to the media. While French wheat was offered, a change in the protein specifications and higher prices due to the stronger euro makes a sale unlikely.
"By raising the protein level, Egypt is narrowing its options and losing the French market and the government will have to pay a higher cost,” Hesham Soliman, president of Alexandria-based Medstar for Trading, said by phone. “I think GASC will have to backtrack soon."
Details on today’s tender including freight:
- Cerealcom made the lowest offer for Romanian wheat at $207.18 a metric ton, the traders said
- Ameropa AG offered to sell U.S. hard red winter wheat at $207.35 a ton
- Louis Dreyfus Co. offered U.S. hard red winter wheat at $208 a ton
- Russian and Ukrainian grain were among lowest, with offers from Midgulf and Louis Dreyfus
Click here for a table of Egypt’s wheat purchases in 2016-17
The U.S. hasn’t sold any wheat to Egypt’s state-run buyer since 2015, data compiled by Bloomberg showed. While Russia has dominated the tenders this season, having sold almost 70 percent of all of purchases, U.S. supplies are becoming more competitive. Benchmark futures in Chicago have dropped about 10 percent since mid-February.
U.S. Wheat Returns
One example of business coming back: American exporters recently sent their first shipment to Egypt in almost four months, according to inspection data from the U.S. Department of Agriculture.
Egypt’s General Authority for Supply Commodities is seeking wheat for delivery June 15 to 24 in the tender. The wheat is required to have 12.5 percent protein content, 0.5 percentage point higher than previous tenders, two traders familiar with the process said yesterday.
While Casillo Group and Glencore Plc offered French wheat, the new standards are harder for France to meet and are a further challenge for the nation already struggling with a smaller crop and the lowest yields in three decades.
"The euro-dollar is not a good thing for French wheat, so I don’t think France would have been competitive anyway, even if the protein rules hadn’t changed," Pierre Tronc, a broker at BGC Partners in Geneva, said earlier Wednesday, before the offers were made public.
"If the new rules with higher protein content remain going forward, it could be a major concern for French wheat," he said.
It’s not clear why the standards were changed, but the nation has gone back and forth on other tender terms over the past year.
Higher protein requirements means Egypt will likely need to pay more for wheat than in the past. The offers in today’s tender were made at similar prices to the March 15 sale, when Chicago futures were about 2 percent higher.