The world's top wheat importer put in a late-season order
for Ukrainian supplies of the grain even as tensions in the country escalated
with a military offensive against pro-Russian separatists.
Egypt's Gasc grain authority, at tender, purchased 55,000
tonnes of Ukrainian wheat, as well as 55,000 tonnes of Russian supplies.
The purchases came despite the mounting death toll in
Ukraine as Kiev launched a military offensive against pro-Russian separatists
in the city of Slavyansk - angering Moscow, which has demanded an emergency
meeting of the UN Security Council.
Two Ukrainian government helicopters have been reported as
shot down, and several people killed, in the move against Slavyansk, where
pro-Russian militia have taken hostages.
However, Gasc received offers for only 350,000
tonnes of wheat, half the amount it typically gets to choose from at tender, and with
Black Sea supplies priced significantly cheaper than those from France and the
Gasc wheat purchases May 2
Russia: 55,000 tonnes bought from Glencore at $292.40 a tonne, plus freight of $11.70 a tonne
Ukraine: 55,000 tonnes bought from Venus at $285.87 a tonne, plus freight of $15.15 a tonne
Even excluding the extra shipping costs compared with
getting wheat to Egypt from the Black Sea, the cheapest French wheat was offered
at a premium of nearly $15 a tonne to the winning Ukraine tender.
An offer from Bunge of US wheat, at $301.74 a tonne,
represented a premium of nearly $16 a tonne.
The competitiveness of Black Sea offers has been improved by
the weakness of local currencies, making exports cheaper in dollar terms, with Agritel
also noting on Friday that Ukraine farmers are "strapped for cash" to pay for
spring sowing programmes.
'Does not need the
At INTL FCStone's Dublin office, Jaime Nolan Miralles said
that Gasc's willingness to buy from Ukraine, despite the mounting unrest,
reflected the country's ability to maintain trade.
"Up to now, exports have not been impacted," he told
As of April 25, Ukraine grain shipments for 2013-14,
starting on July 1, had reached 29.13m tonnes, up 2.3m tonnes over the previous
month, according to farm ministry data.
Furthermore, France "does not need the business", with the
country's shipments, and those of Germany, proving surprisingly strong this
Indeed, the European Union, of which France has accounted
for 32% of export volumes this season, has shipped 25.1m tonnes of soft wheat
so far this season, including 448,000 tonnes of licences unveiled this week.
"With eight weeks' remaining in the current campaign, Europe
needs to push an average of 303,000 tonnes of wheat out the door each week" to
meet the US Department of Agriculture estimate for 29m tonnes of shipments of
all wheat types this season, he said.
Given the growing discount of Paris futures to their Chicago
peers, "one might expect" the estimate for EU exports "to be raised an
additional 1m tonnes", Mr Nolan said.
"But we should also not overlook the 2m-2.5m tonnes of
exportable surplus in wheat still sitting in the Ukraine and Russia."
Gasc's order, due for delivery in the first 10 days of June, takes nearly to 1m tonnes the volume of wheat it has ordered from Ukraine in 2013-14, while taking purchases from Russia at tender to 1.60m tonnes.
The authority has bought more than 5m tonnes overall this season, at a cost approaching $1.5m, including shipping.