Russian wheat wins Egyptian order. But US cheapest

Russian wheat scooped a clean sweep as Egypt's Gasc grain authority extended a buying spree, but US supplies proved their price credentials with the cheapest offer, excluding freight.

Gasc, the official grain buyer for the top wheat importing country, on Wednesday bought 175,000 tonnes of Russian wheat at prices of $246.99-249.00 a tonne excluding freight.

The orders took to 890,000 tonnes, at a cost of more than $230m, Gasc's purchases this month, the start of the 2014-15 wheat marketing season for most northern hemisphere countries, but also the start of Egypt's budget year.

Of this, 355,000 tonnes has come from Russia, harvest forecasts for which have suffered a series of upgrades, the latest on Monday by consultancy Ikar, which raised its forecast for the wheat harvest by 1.2m tonnes to 57.5m tonnes.

Ideas of a rash of Russian offers have also been spurred by sanctions by the European Union and the US against the country, over its role in the Ukraine crisis, potentially making it tougher for some lenders to finance deals.

"However, this could also encourage traders to liquidate their positions in Russian wheat and sell that wheat before the sanctions take effect," US broker CHS Hedging said.

Cheap US cargo

Nonetheless, the Russian offers were not as cheap as some prices being talked about in the market on Tuesday as available from that origin, of below $240 a tonne excluding freight.

Indeed, a cargo of US soft red wheat was the cheapest tendered to Gasc, by Louis Dreyfus at $243.44 a tonne, but ruled out by the high cost of shipping across the Atlantic, of some $25 a tonne.

The offer, in lifting hopes for US exports, supported firmness in Chicago soft red winter wheat futures, which for September delivery were 0.9% higher at $5.24 a bushel in late deals.

Separately on Thursday, the US Department of Agriculture unveiled the sale of 175,500 tonnes of US wheat to Nigeria for 2014-15, plus a further 30,000 tonnes for next season.

This followed a sale to Nigerian buyers of 101,000 tonnes of US wheat announced on Monday.

"It was encouraging to see the US winning that Nigerian business," Chris Narayanan at Societe Generale told, adding that he viewed American wheat export prices as being "in the middle of" the range of offers, including freight, as measured at the major North African import market.

The USDA will tomorrow unveil export sales data for last week, excluding the data above, which Citigroup foresees showing a rise to 475,000-575,000 tonnes in volumes, up from the 443,200 tonnes the week before.

Romania reduction

The Gasc tender was also notable for the absence of competitive offers from Romania, the authority's top origin for wheat imports in 2013-14 and, so far, this season too.

Indeed, only two cargos from Romania were offered this time, down from three at the last tender, a week ago, and six at the event before that, on July 9.

The cheapest offer of Romania wheat was at $253.88 a tonne excluding freight.

However, Romania's wheat harvest has been dogged by the rains which have affected much of the European Union, encouraging sprouting of ripe grain and quality downgrades particularly evident in France, the bloc's top producing country.

'More rain than desired'

World Weather said that on Tuesday that "rain was reported from eastern France to Czech Republic causing more concern over the ongoing wet bias in central Europe.

"Europe weather will still generate a little more rain than desired for small grain and winter rapeseed harvest conditions," although there will be a "break in the precipitation today into Friday from eastern France to Czech Republic before more rain falls during the weekend.

"The environment should be improved over that of the past two weeks, but there may still be more rain than desired to get this year's crops out of the fields without any further quality declines."

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