Grain officials in Egypt, the world's biggest wheat importer, cancelled their first tender in a month because of the "high prices" of offers received, attributing the values to the shortage of high quality Russian supplies.
Egypt's Gasc grain authority, in an unusual move, rejected all 12 offers to its latest tender, which had been scheduled to secure wheat for shipment late next month.
Gasc ditched the tender "because the price were so high compared those on the exchange", a Gasc spokesman said, adding that the authority uses mainly prices in Chicago, but also on Paris's Matif and, to a lesser extent, other markets as benchmarks.
"We will be back soon with another tender," he added.
The Chicago price of $6.90 a bushel on Thursday for the benchmark December contract equates to less than $254 a tonne.
The cheapest lot at the tender, from Bunge, was priced at $274.64 a tonne, excluding shipping, for 60,000 tonnes of Romanian wheat.
On Matif, the benchmark November contract was trading at E198.50 a tonne, equivalent to $268 a tonne, below the cheapest offer of French supplies at $276.25 a tonne, from Toepfer.
The potential for merchants to have applied a premium, given Egypt's political unrest and financial headwinds, was "not the main issue" behind the level of the bids, the spokesman said.
"We have some problem with the shortage in the supplies from Russia – not quantity but quality."
A squeeze on supplies of Group 3 Russian wheat was prompting merchants to fill the void utilising Group 4 supplies, the grade the Egypt buys, the spokesman said.
Russia is typically, at this stage of the season, a keen competitor at Egyptian tenders.
However, it has been widely reported that harvest rains prompted quality downgrades in many areas, such as the black earth region.
The persistence of the rains has, in hampering autumn sowings, continued to underpin Russian wheat prices, which are also gaining support from ideas that the government is to replenish inventories sapped fulfilling domestic needs after 2012's disappointing harvest.
Russia vs France
The cheapest Russian grain was actually offered at $278.00 a tonne, by Cargill – making it more expensive than the cheapest French lot.
However, it is more competitive once the lower shipping costs to Egypt from the Black Sea than from France are factored in.
Signally, no supplies from Ukraine, where wet weather has also hurt autumn seedings, were offered at all.
Ukraiine has been the second-ranked origin, after Romania, for Gasc purchases so far in 2013-14, accounting for more than 700,000 tonnes of the 2.1m tonnes of wheat acquired.