Egypt Buys Wheat Cheapest in Years as Russian Sales Soar
Egypt’s General Authority for Supply Commodities (GASC), has purchased wheat for less than $200 per ton for the first time in two years.
The grain authority for the world’s top wheat importer purchased 120,000 tons of wheat from Russia and Romania, with prices as low as $194.22 a ton at its latest tender from Russia’s Vitol, with the understanding that the Russian government will lift its wheat export levy of €35 (US$39) per ton by May 15.
Russia’s agriculture ministry proposed eliminating the duty by that date, but expressed it openness to reintroducing a ‘minimal’ tax beginning in July for the 2015/2016 season.
The purchase marks the lowest price paid by GASC in two years, and even after adding freight, total cost for the shipment will equal $204 per ton – compared to France, GASC’s main supplier for the 2015/2016 season, from where the lowest offer was $206 per ton pre-freight by Cargill.
The prospect in Russia for the removal of the government’s wheat export tariff, combined with an improved outlook for this season’s crop, and an awareness by traders that there is as much as 2 million tons of wheat stored in the country’s silo’s waiting to be sold, have caused a flurry of Russian wheat offers on the market.
This increase can be evidenced through the past two tenders. Of the unusually large 17 cargoes of wheat offered in the latest tender to GASC, nine were from Russia, compared to the previous tender three weeks before, where of the 12 total cargoes offered, only three were of Russian origin. This ramping up of Russian sales will also likely increase and compound the harvest downward pressure on pricing.