The latest tender by Gasc offers a false dawn to hopes that the Egyptian grain authority may be broadening its origins for wheat purchases.
Sure, the order of 295,000 tonnes of wheat did include 60,000 tonnes of Romanian wheat.
That represented the first purchase of non-Russian wheat by Gasc in eight tenders, stretching back to August, a period during which it has purchased more than 1.5m tonnes of the grain.
However, the Romania buy was down to a quirk in shipping costs, rather than any sense of Russia losing its competiveness in international markets – and loosening its worrying stranglehold on Gasc purchases.
Sure, the winning Romanian tender was, at $194.43 a tonne on an fob basis, priced not too far off Russian offers.
But it would never have won without the help of lower shipping costs from the country to Egypt.
The shipping quote from Romania, at $13.57 a tonne, was up to 17% cheaper than the freight rates of up to $16.20 a tonne Gasc paid for winning Russian cargos.
Indeed, Romania’s victory looks to have been fuelled by the revival in shipping costs, which have recovered strongly over the past six months as the availability of new bulk freight supplies has slowed.
The Baltic Dry index, the sector benchmark, hit 1,743 on Tuesday, its highest in nearly four years, and taking to 81% gains so far in 2017.
Gasc was paying as little as $10.10 a tonne earlier in the year to import wheat from Romania.
Rising shipping rates, in boosting the value of freight costs in purchase prices, tend to favour buying from nearer destinations.
Price vs cost
If that is any comfort to Gasc, it shouldn’t be.
Sure, freight advantage means that Romania may manage a bigger showing in tenders for now.
But the country’s exportable supplies are limited. Its wheat output this year, at 8.6m tonnes, is a little over 10% that of Russia’s.
Instead, the rise in freight costs looks like making it even harder for Gasc to diversify its range of wheat origins beyond Russia, as it should to avoid overdependence on an origin with a record of grain export curbs, and of courting global political controversy.
Gasc may be saving itself valuable dollars, but the cost of relying on Russia for 77% of its wheat imports could prove steep.