Egypt finds cheap US wheat, but no Ukraine offers

Ukraine has failed, again, to offer wheat to an Egyptian wheat tender, amid talk of the country's crisis troubling merchants and elevating prices, even as values in France and the US have come back into contention.

Traders such as Cargill, Olam and Toepfer have offered a tender by Egypt's Gasc grain authority more than 800,000 tonnes of wheat, more than at the previous event three weeks ago.

However, it included no grain from Ukraine, which until January had been neck-and-neck with Russia as the second biggest origin for Gasc' wheat purchases in 2013-14, behind Romania.

The no-show comes amid mounting concerns that the Ukraine crisis, which saw Crimea on Sunday in a controversial ballot vote to secede from the country, is hurting fresh export business, even if the country is proving able to fulfil existing orders.

'Risks of sending vessels'

"Grain continues to flow out of the Ukraine pretty much normally against previous sales," traders at one European commodities house, with substantial Black Sea interests, said.

Cheapest wheat offers to Gasc from each origin, excluding shipping

US (soft red winter): $283.99 a tonne, (Alexgrain)

Russia: $299.84 a tonne, (Louis Dreyfus)

Romania: $302.76 a tonne, (Toepfer)

France: $302.97 a tonne, (Glencore)

Indeed, Ukraine shipped nearly 700,000 tonnes of corn last week, an unusually large amount.

However, there is "little or no new business, because grain prices there are now too high to compete and also because of the risks of sending vessels into Ukrainian ports at the moment".

Some farmers have been hoarding grains as a hedge against a vulnerable hryvnia, which stands near record lows against the dollar, so sending grain prices higher.

Furthermore, the financial disruption caused by the unrest has prompted talk of some reluctance to trust smaller merchants too.

"There is some evidence that the smaller local shippers are struggling to obtain supplies. This may be because of fears that they may not be able to pay," the traders said.

Closer competition

The absence of Ukraine from the offers has left a clear way for neighbouring Romania and Russia to strengthen their grip on exports to Egypt, the top wheat importing country, positioned a short shipping distance from the Black Sea.

Moscow-based analysis group SovEcon on Monday raised to 24.0m-24.4m tonnes, from 23.1m tonnes, its forecast for Russian grain shipments in 2013-14, citing in part the "weaker competition from Ukraine".

However, the rundown for the Gasc tender showed Romania and Russia now having to rely on slower shipping costs to win business.

The cheapest offer to Gasc, by a distance, was of US soft red winter wheat, priced by Alexgrain at $283.99 a tonne excluding shipping.

French wheat was offered as low as $302.97 a tonne by Glencore, cheaper than all but one Romanian and Russian cargo, besides the US offer.

"It will be interesting to see whether Gasc uses the tender as an opportunity to diversify their procurement," Jaime Nolan Miralles at FCStone's Dublin office said.

So far in 2013-14, the authority has bought only a combined 840,000 tonnes of wheat from France and the US, less than one-quarter of the volume purchased from the three Black Sea suppliers.

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