Wheat prices in Paris extended their lead over Chicago peers after Egypt awarded the bulk of its latest wheat tender to France, taking total purchases to 720,000 tonnes in three weeks.

Egypt's state grain buyer, the General Authority for Supply Commodities (Gasc), said that it had, after its latest ring round of merchants, bought 180,000 tonnes of French wheat and 60,000 tonnes of Canadian.

The orders took to nearly 900,000 tonnes the amount of wheat that Egypt, the biggest importer of the crop, has purchased since Russia announced a ban on grain exports three weeks ago.

With Russia, Egypt's biggest supplier last year, sidelined, France has picked up the great majority of Gasc's tender business.

"At this rate, France will not have an exportable surplus by Christmas," David Sheppard, managing director of UK grain merchant Gleadell said.

'US too expensive'

The order was credited for maintaining Paris's outperformance of Chicago in wheat markets.

Paris wheat for November closed 0.2% higher at E214.00 a tonne, while Chicago's near-term lot, September, finished 4.0% lower at $6.47 ¾ a bushel.

"It looks like US wheat is just too expensive," Mr Sheppard said, also flagging the two markets' divergent performances on Tuesday, when wheat closed down 0.2% in Paris and by 1.7% in Chicago. 

While cheaper on a like-for-like basis, US wheat has a geographical disadvantage to France in many of Russia's abandoned export markets.

The Mediterranean basin, on France's doorstep, accounts for about one-quarter of global trade.

Indeed, at investment bank Societe Generale, analyst Emmanuel Jayet flagged the return of Paris wheat to a premium of about $20 a tonne over Chicago, and noted that the gap had widened to $60 a tonne in the 2007-08 and 2003 price spikes.

Tighter supplies in Europe should continue to have a "dramatic impact" on the  Paris-Chicago wheat spread, he added.

London vs Paris

London feed wheat also ended higher, adding 0.4% to £147.30 and closing some of its unusually large discount to Paris milling wheat.

Feed grain prices have been depressed by a rainy spell delaying harvest in parts of northern Europe, notably Germany and the UK, and putting food wheat at risk of downgrade.

However, London's current discount of some £30 a tonne looked "too big a gap" compared with a historic figure of £10-15 a tonne, Mr Sheppard said.