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US wheat shipments to Egypt 'to see boost', at last, from specification cut

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A cut by Egypt’s Gasc to its protein specifications on wheat orders could, at last, boost purchases of US hard red winter wheat, officials said, although sticking by forecasts of flat overall imports this season.

 

A specifications shake-up early last year, which saw minimum protein levels on imports cut for wheat from a range of origins, “could increase offers of hard red winter wheat” in tenders by Gasc, the US Department of Agriculture bureau in Cairo said, see a "potential opportunity" for the grain.

 

The analysis rested also on an assessment that “prices are competitive” for US hard red winter wheat, the bureau said, seeing an opportunity too for Gasc to lock-in "greater diversification or origins and better quality".

 

Spot Kansas City US hard red winter wheat (HRW) futures earlier this month touched $3.61 ¾ a bushel, the lowest since late 2005, although have since recovered to stand at $4.08 ¾ a bushel on Thursday.

 

US vs Black Sea

An improved appetite for HRW by Gasc - Egypt’s official grain authority, and typically responsible for roughly half the country’s wheat imports - would stand to improve the US’s faded fortunes in shipments to the country, the world’s top importer of the grain.

 

Overall US exports to Egypt totalled 1.50m tonnes in the five seasons to 2018-19, down from, 7.24m tonnes the previous five years.

 

However, Black Sea supplies, for which protein hurdles have also been lowered, have taken an increasing profile in Gasc orders.

 

Gasc last year also lowered its minimum protein requirement for Romanian, Russian and Ukrainian wheat by 0.5 points, to 11.5%, and to French supplies to 11.0%, besides trimming the US hard red winter wheat specification from 12.5% to 12%.

 

The bureau also noted that US HRW was the only wheat category “that has a specification for wet gluten”, for which the minimum level was lowered by 1 point to 25%.

 

The US’s 2018 hard red winter wheat crop had an average wet gluten content of 28.1%, and protein level of 12.4%, according to US Wheat Associates, which has yet to reveal data for the 2019 harvest.

 

The five-year average wet gluten level is 28.5%, with protein at 12.4%.

 

Slowish start to 2019-20

The bureau made its comments as it stood by expectations of Egypt’s overall wheat imports hitting 12.5m tonnes in 2019-20, in line with levels seen the past two seasons.

 

While Egypt’s wheat consumption is growing by some 300,000 tonnes a year, backed by population growth of 2.4% a year, local production has expanded in line, helped by seed improvements, and encouraged by higher state procurement prices.

 

The import forecast comes despite a relatively slow start to Gasc’s 2019-20 import campaign, with the 180,000 tonnes purchased at tender on Wednesday, for delivery late next month, taking to 2.31m tonnes its orders so far this season.

 

As of the same date last season, Gasc had purchased nearly 4.0m tonnes, with the total for 2017-18 2.91m tonnes.

 

The average prices that Gasc paid at its latest tender - at $194.91 per tonne excluding freight and just over $211 per tonne with it - were the lowest it has enjoyed in 18 months.

 

The authority passed on another tender for delivery in early November, for which the cheapest offer was pitched at $197.95 per tonne, by Posco for Russian wheat, and with only two other offers below $200 per tonne.

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