‘Aggressive’ bid wins Romania wheat sale to Egypt

Romania gained a foothold in the 10m-tonne-a-year business for supplying Egypt with wheat as higher prices of Russia-based supplies eroded their competitive advantage.

Russia won 180,000 tonnes of the 240,000 tonnes that Egypt’s state grain buyer, the General Authority for Supply Commodities (Gasc), purchased after its third tender in 10 days.

The award took to 900,000 tonnes the total that Egypt, the top wheat buyer, has bought from Russia since Moscow at the start of July lifted its ban on grain exports.

However, a hike in prices asked for Russian wheat put Romanian grain in the frame too, for the remaining 60,000 tonnes of Egypt’s order.

At $262.50 a tonne excluding freight, the Romanian wheat offered by Toepfer equalled or beat all but the cheapest cargo of Russian grain offered, and was a match on shipping charges too.

‘Aggressive sale’

The tender victory has been long-waited by Romania, which was on the verge of being placed on Egypt’s list of approved suppliers a year ago, before the drought in the Black Sea area prompted Gasc to tread more carefully in trading with the region.

It also represents a second key tender victory, after Romanian wheat filled part of a 150,000-tonne order by Jordan a month ago.

The Jordanian business was facilitated by the emergence in Romania of an ambitious Lebanese trading family, a source familiar with central European grain dynamics told Agrimoney.com, although it is not known whether the family had a hand in the Egyptian order.

The price offered to Gasc, equivalent to about E185 a tonne, "looks like an aggressive sale", the source added.

Price divergence

However, Romania’s win also reflected a rise of more than $12 a tonne in a little over a week in the cheapest offer for Russian wheat, despite a continued decline in prices that farmers are receiving – implying hefty margins for merchants.

Domestic prices for fourth-grade milling wheat, the type commonly used in exports, have in some areas fallen below the intervention level set at 4,650 roubles ($165) a tonne in European parts of Russia, according to consultancy SovEcon.

Prices have been weakened by harvest pressure and a clamour by farmers, whose finances were weakened by last year’s drought, for funds to pay for autumn sowings.

The rise in Russia’s wheat export prices also lowered their discount to European supplies to less than $17 a tonne, from about $40 a tonne last week.

Nonetheless, the discount remains wider than historic levels, and was evident in data showing the European Union cleared 157,000 tonnes of wheat for export this week, the lowest figure for nearly two months and half the average levels achieved in 2010-11.

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