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Egypt wheat tender attracts huge 1.3m tonnes in offers, 23.07.15

A tender by Egypt, the world's biggest wheat importer, underlined the plethora of the grain for sale when it received offers for an unusually large 22 cargos – including some offered at prices not seen by the buyer in years.

Egypt's Gasc grain authority - at its fourth wheat tender of 2015-16, which started this month - purchased 175,000 tonnes of the grain, all from Russia, for an average of $205.37 as tonne including freight.

However, Gasc was offered 1.3m tonnes of wheat, an unusually large amount even for the start of the season, when harvest brings fresh supplies to the market.

Tuesday's order was for delivery in the first 10 days of September, when the northern hemisphere wheat harvest will be largely over, and indeed Australia's crop only about a month from its initial cuts.

Gasc's previous tender, last week, attracted less than 900,000 tonnes in offers, while its July tenders last year received at best some 950,000 tonnes in offers.

Russian selling spree

The latest tender was notable in part for an increase to three in the number of offers of French wheat, from one last week, although priced at $211 a tonne excluding freight, the cargos were priced well above the winning offers.

Although French wheat proved Gasc's most popular purchase at tender last season, with more than 800,000 tonnes in orders, that was largely down to a poor-quality harvest sold at cheap prices, and is a performance which looks unlikely to be repeated in 2015-16, when French traders are likely to hold out for a premium.

However, the tender also lured out 12 cargos of Russian wheat, up from seven at last week's event, and representative of ample supplies from a country noted for its competitively priced supplies.

While Russia is expecting a strong wheat harvest this season, its exports so far have been unusually weak, a decline seen by many commentators as reflecting the uncertainty posed by its export tax.

'Problems with the duty'

Russian wheat exports in July will tumble to some 1.0m tonnes, from 2.67m tonnes a year before, influential consultancy SovEcon forecast on Tuesday.

Russian wheat exports for the first half of July, at 200,000 tonnes, were the lowest for the period since 2004.

The consultancy has cautioned over the impact of a duty which, in essence, takes half the value of wheat on prices over 11,000 roubles per tonne, equivalent to $193.35 a tonne at Tuesday's exchange rate - but opening up a risk to grain merchants given the volatility of currency markets.

Separately, Rusagrotrans, Russia's largest transporter of crops by rail, cutting "problems with the duty calculation", forecast that the country's overall grain exports by fall 31% next month to 3.2m tonnes.

Prices fall

The slow start to exports, and pressure from the strong harvest, has been evident in weakening Russian prices, which according to SovEcon fell by $1.50 to $199.50 per tonne in Black Sea ports, for grain of 12.5% protein.

Consultancy Ikar pegged the decline at $4 per tonne, to $197 per tonne, excluding freight.

Gasc on Tuesday purchased wheat even cheaper, with one cargo at $193.75 a tonne, down 3.0% on the price last week, and more than 20% cheaper than it was buying Russian supplies a year ago.

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