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Egypt extends January wheat buying above 1m tonnes

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Egyptian officials extended their January spending spree on wheat to $350m by purchasing further supplies from Russia and the US, exploiting prices which remain near three-year lows on the benchmark Chicago futures market.

Egypt's Gasc grain authority, at its fourth tender this month, bought 180,000 tonnes of Russian wheat and 60,000 tonnes of US supplies, taking its total January purchases to 1.13m tonnes.

The average price for the orders fell below $300 a tonne, a reflection of the lower prices on offer thanks to improved confidence in world supplies, and with US data two weeks ago highlighting a switch by livestock farmers back to corn in feed.

While the trend is viewed as particularly strong in the US, where livestock feeders have a historic preference for corn, the popularity of the yellow grain is growing in Europe too, fuelled by the growth of Ukraine as a producer and exporter opening up a competitively priced and convenient origin.

Separately on Tuesday, the US Department of Agriculture announced the sale of 110,000 tonnes of US corn to Spain.

US the cheapest

Gasc's purchase Russian wheat, its biggest since August, highlights an unforeseen revival in the country's export presence, which typically peaks early in the marketing year.

Results of Gasc tender, January 28

60,000 tonnes Russian wheat from Louis Dreyfus at $298.95 a tonne, cost and freight

60,000 tonnes Russian wheat from Venus at $298.95 a tonne, cost and freight

60,000 tonnes Russian wheat from Cenex Harvest at $299.85 a tonne, cost and freight

60,000 tonnes US wheat from Ameropa at $299.85 a tonne, cost and freight

Nonetheless, US wheat was by far the most competitive - excluding the extra cost of shipping across the Atlantic - with the price of the winning US bid at $259.88 a tonne before freight.

The cheapest Russian offer, excluding freight, was priced at $283.62 a tonne.

Quality hurdle

Gasc has now ordered more than 1m tonnes of Russian wheat so far in 2013-14, and 180,000 tonnes of US supplies, out of total purchases of some 4.2m tonnes.

Romania remains the most popular origin.

While French wheat remained competitive, with Cargill offering supplies at $277.90 a tonne plus freight of $20.50 a tonne, the origin was sidelined by a tightening of supply criteria by Gasc, which said it would reject any wheat containing more than 13.0% moisture.

French wheat typically has a moisture level of 13.5%.

'Not great news at all'

"This is not great news at all for French wheat suppliers. Nor for suppliers anywhere in that it looks like Gasc is getting more and more confidence about its supplies," a UK wheat trader told Agrimoney.com.

Paris wheat for March stood down 0.8% at E192.75 a tonne in late deals, contrasting with a 0.8% increase to $5.67 ¾ a bushel in Chicago's March wheat contract, against a background of a little-changed euro: dollar rate.

By Agrimoney.com

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