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Egypt steps up wheat purchases as prices fall

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Egypt, the world's biggest wheat importer, took nearly to 900,000 tonnes in two weeks its purchases of the grain, exploiting falls in prices to multi-month lows on both sides of the Atlantic.

Egypt's Gasc grain authority, at its third tender this month, bought 295,000 tonnes of wheat from France, Russia, Ukraine and the US for a total of just under $89m including freight.

The order, for prices of $301.00-302.49 a tonne including freight, brought to 890,000 tonnes Gasc's purchases at tender so far in 2014.

Total purchases for the 2013-14 season, starting in July, have reached about 4m tonnes, at a cost of more than $1.1bn.

The recent acceleration has come amid a market decline, fuelled by ideas of loosening supplies and increased competition for competitively priced corn, which has taken Paris wheat futures to their lowest since September, and Chicago futures to three-year lows.

Lower prices

Indeed, Egypt itself is paying more than 5% less for its wheat than a month ago, even factoring in a rise in shipping costs as the country has turned to the US for some of its needs.

Gasc wheat orders, January 16

60,000 tonnes, French wheat, from Soufflet at $301 a tonne c&f

60,000 tonnes, French wheat, from Invivo at $301 a tonne c&f

60,000 tonnes, Russian wheat, from Cargill at $301.44 a tonne c&f

55,000 tonnes, Ukraine wheat, from Venus at $301.27 a tonne c&f

60,000 tonnes, US wheat, from Venus at $302.49 a tonne c&f

The winning Russian cargo was priced at $286.60, but with freight costs less than half those of transporting grain across the Atlantic.

The winning French offers were priced at some $279 a tonne, excluding freight.

Price reaction

In the US, the order helped eased reassure markets after some reasonable weekly wheat export sales data, as some 320,000 tonnes of old crop plus 82,000 tonnes for 2014-15, at the bottom end of investors' range of forecasts.

Chicago wheat for March stood 0.7% higher at $5.71 ¾ a bushel with an hour's trading to go.

In Paris, wheat for March ended down 0.3% at E192.50 a tonne, despite the victory, and data showing weekly European Union exports of the grain at 810,000 tonnes.

The EU has cleared 15.9m tonnes of wheat so far this season, compared with 10.4m tonnes as of the same stage of 2012-13.

INTL FCStone on Thursday outlined downbeat expectations for European Union wheat prices, stating that stocks may end 2013-14 above investor expectations, and warning of a growing trend of replacing wheat with corn in feed rations.

The EU issued 646,000 tonnes in corn import licences this week, taking the total in 2013-14 to 6.2m tonnes, narrowly ahead of the 6.0m tonnes a year ago.


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