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Egypt makes biggest wheat purchase of 2013

Cash-strapped Egypt, in its first wheat tender on international markets since February, made its biggest purchase of 2013, after attracting offers by 11 merchants of grain from five origin countries.

Egypt, historically the world's biggest wheat importer, purchased 120,000 tonnes of the grain from Romania and 60,000 tonnes from Ukraine.

The total of 180,000 tonnes was the largest order since December, before the Egypt's financial crisis curtailed the country's ability to afford imports, prompting it to rely on inventories and on purchases from what has proved a strong domestic harvest.

Egypt's Gasc grain authority, which handled the tendering process, has not since February requested wheat, and even then bought only 60,000 tonnes, of US soft red winter wheat.

Price details

The price paid on Tuesday for Romanian and Ukrainian wheat, at an average of $251.24 excluding freight and $263.44 including shipping, is significantly lower than it paid for February's US soft red winter wheat.

That cost a total of $325.60 a tonne, including $296.75 a tonne for the grain itself.

Even so, Egypt was seen likely to have got a better deal were it not for the transaction risk involved in dealing with a country with threadbare finances and suffering widespread unrest.

Indeed, many observers had doubts over the willingness of many merchants to offer to the tender, with INTL FCStone saying earlier that "it is expected that the tender line-up will remain thin because of the associated risk attached to this purchase".

Trade response

In the event, 11 merchants replied to the tender, offering wheat from France, Romania, Russia, Ukraine and the US.

And the price paid was seen as including only a modest premium for deal risk.

"It looks a bit bigger than they might have paid normally, but not much," a UK grain trader told Agrimoney.com.

"Egypt is still going to be a big wheat importer unless something goes very wrong. Maybe merchants saw this as a good opportunity to get onside with Gasc."

The International Grains Council on Monday forecast Egypt's wheat imports in 2013-14 at 9.0m tonnes, a rise of 200,000 tonnes year on year.

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