Egyptian wheat tender attracts most interest in two months

05.10.2016

A wheat tender from Gasc, the state grain buyer from Egypt, received its highest level of interest in two months, after changes to its quarantine policy.

This marks the second tender since Egypt lifted its zero-tolerance policy on ergot, a common grain fungus that can be poisonous to humans in high quantities.

Egypt has now changed its policy to allow for a minimum acceptable level of ergot, in line with international policy.

Interest was limited at the previous tender, until Egypt also conceded that inspections could be carried out at the port of origin, rather than on arrival, reducing the potential costs of rejected cargoes.

The relatively enthusiastic uptake, and the lower premium applied to the offers, suggests that the world's top grain buyer may be winning back the trust of sellers after weeks of disruption.

Black Sea product most attractively priced

The tender received nine offers from seven companies at its wheat tender on Tuesday.

"Black Sea should remain the most competitive," said Paris-based consultancy Agritel ahead of the tender.

And so it proved, with the lowest offer, of $177.77 a tonne for 60,000 tonnes of Russian wheat coming from Union company, traders said.

This compares to an offer of wheat from Union at $178.79 made on September 22.

Falling premiums

Over the same period, prices in Russia have been increasing, up $1.5 a tonne to $171.00 as of Monday, according the Moscow-based consultancy SovEcon.

This suggests that traders are beginning to offer to Egypt at closer the market price, suggesting they are reducing the risk premium they put on shipments to Egypt.

Russian wheat was offered between $177.77 and $183.50 a tonne, excluding freight.

Romanian wheat was offered between $180.99 and $192.23 a tonne, excluding freight.

Gaining trust

Winning back the trust of sellers, some of who got their fingers burned when cargoes were rejected due to ergot contamination, will be crucial for Egypt, which has missed weeks of exports and needs to catch up before supplies run dry.

The urgency is exacerbated by the fact that its own domestic wheat purchase regime was dogged by a corruption scandal this year, with some supposed wheat purchases turning out to have been bogus.

Egypt's subsidised wheat programme is seen as key to political stability, as the military government can ill afford food price riots.
    


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