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Wheat Traders Weigh Egypt Tender Risks as Paris Futures Advance

16 февраля 2016 года

Traders are considering the risk of offering wheat to Egypt as the world’s largest importer struggles to regain the market’s confidence after rejecting a French cargo.

Egypt is seeking to buy wheat for March shipment at a tender later Friday, according to two traders familiar with the matter who asked to not be identified because they’re not authorized to speak to media. The nation failed to buy the grain twice last week as traders refrained from offering or charged higher prices amid confusion over how much fungus is allowed in the shipment.

Egypt, which provides subsidized bread for its 88 million people, stumbled into a standoff with international traders after refusing a French grain cargo supplied by Bunge Ltd. over the level of ergot, a naturally occurring fungus. Milling wheat futures traded in Paris are near a five-year low on concern the dispute would result in less demand for Europe’s big harvest.

“There’s still a risk with the ergot story,” Pierre Tronc, a broker at Aurel BGC, said by phone from Paris. “I don’t expect to see a lot of offers.”

Futures for March gained 0.2 percent to 153 euros ($172.57) a metric ton on Euronext by 12:57 p.m. in Paris. The weaker euro could be supportive, said Arnaud Saulais, a broker at Starsupply Commodity Brokers.

Bunge, one of the world’s largest crop traders, said this week it began legal proceedings over Egypt’s rejection of its wheat cargo. Amira, the vessel chartered by Bunge, is still anchored outside the Egyptian port of Damietta, according to ship-tracking data on Bloomberg.

The dispute with traders makes it difficult to determine which country would have the advantage in today’s tender. While French wheat for loading at the port of Rouen is currently trading at a lower price than supplies from rivals in the Black Sea region, it tends to have more ergot.

“It’s hard to say which origins will be more competitive on the tender because traders will probably charge a higher price to include a risk premium,” Tronc said. “Russia and Romania don’t have the same ergot issue as France, so we will have to wait and see.”

French wheat with a minimum 11 percent protein content for loading at the port of Rouen was at 153.31 euros a ton Thursday, according to data from Office National Interprofessionnel des Grandes Cultures.

Russian grain with 12.5 percent protein content was at $181 a ton last Friday, data from the Institute for Agricultural Market Studies show. Russia had a freight advantage of just over $3 a ton in the last Egyptian tender.

Source: Daily News | #grain | Comments: 0 Views: 135

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