Romania's grip on Egypt wheat orders loosens

Romania's stranglehold on wheat exports to the top wheat importer loosened amid continued worries over the quality of its harvest, with Black Sea rivals Russia and Ukraine slashing prices to win business.

Egypt's Gasc grain authority, at its third tender this month, bought 235,000 tonnes of wheat at an average price of some $245 a tonne excluding shipping - its cheapest purchase since at least 2012-13.

Indeed, the price was down more than $5 a tonne on the price at the group's last tender, two weeks ago, representing a saving of more than $1m.

And it reflected an improvement in particular in the competitiveness of Russian and Ukrainian wheat, for which rapid harvest progress, encouraged by dry weather, is seen weighing on prices  - in contrast to the rainfall which has raised questions over the quality of Romania's crop.

Lowest offers

Russian wheat was offered as low as $244.50 a tonne excluding freight by Olam, the agricultural commodities trader, down more than $10 a tonne on the cheapest offer from that origin two weeks ago.

Gasc wheat purchases, July 23

Romania: 60,000 tonnes from Invivo, $245.47 a tonne, plus $10.41 freight

Russia: 60,000 tonnes from Olam, $244.50 a tonne, plus $11.98 a tonne freight

Russia: 60,000 tonnes from Louis Dreyfus, $246.50 a tonne, plus $10.70 a tonne freight

Ukraine: 55,000 tonnes from Venus, $244.37 a tonne, plus $12.70 a tonne freight

Consultancy Ikar on Tuesday highlighted the dent to Russian wheat prices from a harvest speeded by dry weather, saying that prices of new crop wheat of 12.5% protein had fallen by $4 a tonne last week, with higher crop prospects weighing too.

Ikar, SovEcon and the Russian agriculture ministry all last week raised their forecasts for the Russian grains harvest– to levels ranging from 92m-93m tonnes (SovEcon) to an official estimate of 100m tonnes or more.

Still, the cheapest offer to Gasc was of Ukrainian wheat, tendered by Venus at $244.37 a tonne, with some talk of merchants relying on prices to win business, in the face of the country's continued unrest.

This year's Ukraine crop is in fact unlikely to prove a vintage crop in terms of quality, with talk of lower protein levels, although it is unclear whether this is down to late rains or to a dearth of fertilizer applications by farmers faced with a credit squeeze.

Nonetheless, it is expected to come in on quantity at about 21m-22m tonnes, only a small drop from last year's 22.3m-tonne harvest.

'Chickens coming home to roost'

Gasc was this time offered only three cargos of Romanian wheat, half the number at its last tender, of which it purchased one, sold by Invivo at $245.47 a tonne.

Romania's loss of dominance it has had at the previous five Gasc tenders, stretching back to May, follows continued reports of quality damage to its crop from harvest-time rains, which encourage sprouting and lower protein levels, reducing kernels' milling quality and threatening downgrades to feed.

"It looks like the chickens are coming home to roost in Romania," said one European grain trader.

"There is talk of merchants struggling to get [Romanian] grain of the right quality to fulfil their orders. I wouldn't be surprised to see Russian supplies feature heavily in tenders from here."

No French offers

French wheat, another popular purchase for Gasc, is also believed to have suffered quality damage from rain, with talk of significant quantities of grain being offered to feed markets, and none was submitted to the latest tender, compared with five cargos last time.

No US wheat was tendered either, as at the July 9 event.

Poor quality drives French wheat onto feed market
Strat Grains underlines fears for EU wheat quality
Egypt buys more Romania wheat despite rain concern
Gasc wheat purchase unearths Romania quality fears
Agricultural Commodities
Agricultural Markets
Agricultural Companies
Agricultural Events