While Russia dominated Egyptian grain purchases since the beginning of the marketing year in July, France is starting to break into the market as the euro weakens

Bloomberg
Cairo/London

In the battle for business of the world’s biggest wheat buyer, competition between France and Russia is heating up.
While Russia dominated Egyptian grain purchases since the beginning of the marketing year in July, France is starting to break into the market as the euro weakens. In two tenders this week, Egypt bought two cargoes of Russian wheat and one each of French and Ukrainian.
France, which harvested a record wheat crop this year and regularly counts among the world’s top five exporters, has a lot of grain to ship. Prices have started to respond, with French grain undercutting Russian offers in both of this week’s tenders, though Russia remained a better value in some cases when accounting for freight.
“Current euro weakness makes French wheat very competitive,” Stephane Bernhard, a managing director at InVivo Trading, said in an interview Wednesday at the Global Grain conference in Geneva. “Currencies are playing a bigger role than in the past because prices are generally low in dollars.”
The weakening rouble boosted Russian exports earlier in the marketing year, then the currency stabilised in recent months and the euro’s decline accelerated.
Milling wheat futures on Euronext in Paris, the European benchmark, have tumbled about 10% this year as bumper harvests push global stockpiles to a 29-year high. France produced a record crop of 41mn metric tonnes, according to FranceAgriMer. InVivo estimates a slightly smaller harvest at about 39.8mn tonnes, according to Bernhard, whose company accounts for about a third of French wheat exports.
The winning Russian and French wheat offers in Wednesday’s tender were within 27 cents of each other, with French supplies cheapest. Excluding shipping, French grain was $200 a ton and the Russian offer was $203.78 a tonne, according to two traders who asked not to be identified because they’re not authorized to speak to media.
Russia is still the biggest source of grain sold into Egypt’s tenders this season. Egypt’s state-run wheat buyer, the General Authority for Supply Commodities, bought 1.53mn tonnes of Russian wheat since July 1. Romania and Ukraine are also major suppliers, with sales at least 360,000 tonnes this year, and France has sold 240,000 tonnes, according to Bloomberg calculations.
“The Black Sea region is the low-cost producer,” Hans Stoldt, a director at Swiss grain trading company Ameropa AG, said on a panel in Geneva on Wednesday. “The others will have to compete if they want to keep their market share.”