Agrimoney.com | Losing offer steals the show as Gasc takes wheat …
Gasc took its purchases at tender this season to 1.50m tonnes – but, unusually, it was a failed bid which attracted most attention, in showing US wheat as the “cheapest in the world”.
Gasc – grain authority for Egypt, the world’s top wheat importer – purchased 180,000 tonnes of wheat at tender, comprising two cargos of Romanian supplies, and one from Russia.
The order – which, at an average price of £187.00 a tonne including freight, was in line with that paid at the previous tender, on Tuesday last week – took to 1.50m tonnes the authority’s purchases so far in 2016-17, which started in July.
Nonetheless, that is more than 600,000 tonnes behind the pace of purchases as of mid-October last year, with the reduction a reflection of Egypt’s decision in August to reintroduce a zero tolerance policy on contamination of cargos with the ergot fungus.
The policy, which was reversed late last month, led to Egypt being in effect blacklisted by global grain merchants, given the difficulty of guaranteeing cargos ergot free.
The fungus, a common contaminant, and typically allowed by importers up to levels of 0.05%.
Lowest price, highest profile
Gasc has now bought nearly 1.1m tonnes of Russian wheat so far this season, and 360,000 tonnes from Romania.
However, it was a losing offer, of US hard red winter wheat, that attracted more market attention at the latest tender.
The cargo, tendered by Louis Dreyfus, was priced at £173.98 a tonne, some £4 a tonne below the cheapest offer of Russian wheat (also from Louis Dreyfus), and £6 a tonne below the winning Romanian bid.
While the US cargo was disqualified for being of a higher protein grade not matching the tender’s specifications, the low price, for a higher specification wheat, surprised traders – and fuelled a 5% surge in Chicago wheat futures, the world benchmark.
Futures in hard red winter wheat itself closed up 3.9% at £4.14 a bushel.
‘Cheapest in the world’
The price comparison showed that “US hard red winter wheat is the cheapest in the world,” said Terry Reilly at broker Futures International.
“The [export] market is telling the futures market that US wheat is available and cheap.”
This message comes at a time when other major buyers are in the market too, with Saudi Arabia tendering for 595,000 tonnes of wheat on Thursday, when a bidding deadline closed on a tender by Algeria, the world’s second biggest importer of the grain.
“I am not sure this was slip up by Louis Dreyfus,” a UK grain trader told Agrimoney.com.
“Why not advertise that you have cheap wheat to sell, at a time when buyers are in town?”