Paris wheat futures hit seven-month high, helped by Egyptian order


Paris wheat futures touched a seven-month high after France, at last, gained an order of the grain from Gasc, as the Egyptian group extended one of the biggest purchasing sprees in its history.

Paris wheat for March gained 1.3% at one point on Wednesday to touch E174.50 a tonne for the first time, for a spot contract, since July last year.

The gain was supported by a strong performance by wheat futures in Chicago, and the purchase by Cairo-based Gasc, grain authority for the world's top wheat importing country, of 120,000 tonnes of French supplies, amid a 535,000-tonne order.

The order was Gasc's first for 2016-17 of French wheat – which was the authority's top origin two years ago, despite the extra cost of shipping grain to Egypt from France, compared with from the Black Sea ports of Romania, Russia or Ukraine.

"Traders were positive about this first trade to Egypt, allowing wheat [futures] to go up," Paris-based consultancy Agritel said.

While Russian wheat, backed by a boost to supplies from a record harvest last year, has dominated Gasc purchases so far this season - accounting for 3.6m tonnes of the 5.1m tonnes purchased – the rise in the rouble, up more than 5% this year against the dollar, has undermined its competitiveness.

French, US wheat cheapest

Indeed, excluding shipping costs, French wheat, offered as low as $197.00 a tonne by ag giant Cargill, was the cheapest offered to Gasc.

Cargill's offer represented a $2-a-tonne cut from its offer made to Gasc's previous tender, a week ago, a reflection of broader market weakness.

The cheapest Russian offer, from AOS, was priced at $197.94 a tonne excluding freight,

In fact, US hard red winter wheat was offered cheaper to Gasc, at $197.50 a tonne, although failed to win business thanks to the hefty costs, of more than $22 a tonne, of shipping the grain to Egypt across the Atlantic.

US wheat is only a "freight spread away from being competitive" on Egyptian business, Minneapolis-based broker Benson Quinn Commodities said.

Blending finesse

The return of French wheat to success in Gasc tenders underlines a broadly less jaundiced view of the country's export prospects, after rain damage dented severely the quantity and quality of last year's harvest.

For December, the latest month for which data are available, French exports of soft wheat outside the European Union rose to 361,000 tonnes, from 233,000 tonnes in November.

FranceAgriMer in February nudged higher by 100,000 tonnes to 4.9m tonnes its forecast for French wheat exports outside the EU for 2016-17, a second upgrade in two months.

"France seems to have a bit more to offer than had been thought, with traders through blending getting on top of the quality issues thrown up by last year's harvest," a UK grain trader told

"Egyptian business, which is not as demanding in quality terms as that from some of the other North African buyers, is a natural place for French merchants to look."

Last orders of the season?

However, Gasc's appetite for purchases in 2016-17 may be sated after its February buying spree.

The latest 535,000-tonne order matched the largest purchase since at least 2010, besides taking the authority's buying spree to 1.26m tonnes in 11 days.

Gasc has now bought 5.14m tonnes at tender this season, well ahead of the 4.2m tonnes purchased in the whole of 2015-16.

The authority's pace of purchases tends to slow later in the season, in anticipation of the domestic harvest.


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