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
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.
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
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
"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.