US wheat grabbed its first sale to the Egyptian government in more than two years as the world’s biggest buyer requested grain with a higher protein content, knocking France out of the mix.
Egypt’s General Authority for Supply Commodities bought two cargoes of US wheat totaling 115,000 metric tons, of 39 percent of the amount purchased, according to two traders involved who asked not to be identified because they’re not authorized to speak to the media. Romanian grain was the cheapest, and Egypt also bought from top shipper Russia and Ukraine.
US sales to Egypt’s state-run buyer had stalled since 2015 after record production elsewhere led to heavy price discounting. While Russian wheat has dominated Egyptian tenders this season, accounting for almost 70 percent of the grain purchased, US supplies are becoming more competitive with current domestic prices about 18 percent cheaper than the previous sale.
“It will create a little more urgency for US wheat supplies from buyers who have been waiting for lower prices,” Alan Brugler, president of Brugler Marketing & Management in Omaha, Nebraska, said in a telephone interview. “These sales may also cause Russia to cut prices despite the strength of the ruble to prevent a further build in stocks.” Benchmark wheat futures in Chicago rose before the details of the latest tender were published, having dropped to a three-week low.
Egypt sought protein levels at 0.5 percentage point above previous tenders, traders familiar with the process said. This brought the protein standards for Black Sea cargoes to 12.5 percent and 12 percent for France.
“France has probably lost Egypt for 2017-18,” researcher AgResource Co. said in a report. While French wheat was offered by Casillo Group and Glencore Plc, none was sold. The nation’s grain is struggling with a stronger euro and smaller supply this season.
“The euro-dollar is not a good thing for French wheat, so I don’t think France would have been competitive anyway, even if the protein rules hadn’t changed,” Pierre Tronc, a broker at BGC Partners in Geneva, said before the results were made public. “If the new rules with higher protein content remain going forward, it could be a major concern for French wheat.”
Some other details of the latest tender: Cerealcom sold 60,000 tons of Romanian wheat at $207.18 a ton, including freight. Ameropa AG sold 60,000 tons of US hard red winter wheat at $207.25 a ton. Louis Dreyfus Co. sold 55,000 tons of US hard red winter wheat at $207.90 a ton and 60,000 tons of Ukrainian wheat at $208.74 a ton. Midgulf sold 60,000 tons of Russian wheat at $208.49 a ton.