French wheat has a better chance at competing against grain from Russia and Ukraine in Egypt’s Thursday tender as the weakening euro makes purchases more attractive for overseas buyers.
The lowest offer for French wheat was 3.4 percent below the cheapest from Russia in the bids for Egypt’s tender today, according to two traders involved who asked not to be identified because they’re not authorized to speak to the media. The euro is near a three-month low against the dollar, boosting the attractiveness of French wheat, consultants at Agritel wrote in a report.
Russian grain has dominated Egypt’s tenders since the 2015-16 season started in July. The Middle Eastern country bought 1.4 million metric tons of Russian wheat in the period, compared with less than 350,000 tons each from Ukraine and Romania and just one 60,000-ton cargo of supplies from France, Bloomberg calculations show.
“French offers this time are likely to be much more competitive than in previous tenders even when you consider the cost of freight,” Edward de Wismes, a broker at Aurel BGC in Paris, said by e-mail.
Grain Tender
Egypt, the world’s largest buyer of wheat, is seeking to buy at least 60,000 tons for shipment Dec. 1-10 in a tender Thursday, according to the country’s state buyer, the General Authority for Supply Commodities.
While wheat from the Black Sea region has benefited from lower freight costs, the difference between French and Russian grain narrowed in recent tenders. The euro has fallen relative to the dollar over the past month amid speculation the Federal Reserve may raise interest rates.
The cost of shipping wheat from France’s Rouen to Egypt is currently at $14.09 a ton while hauling the grain from Ukraine’s port of Odessa costs $11.59 a ton, according to rates provided by AXS Marine.
It will be “interesting” to see how French wheat competes after the euro’s drop and how Russia responds, Matt Ammermann, a commodity risk manager at INTL FCStone Inc., said in an e-mailed report.
“Maybe we get a mix of both origins today?” he said.
Source: Bloomberg
