Egypt, the world’s largest wheat importer, bought 420,000 metric tonnes of Russian and Romanian grain in its latest tender on Tuesday, the biggest purchase in two years.
The country’s General Authority for Supply Commodities bought the supplies at $192.18 to $194.30 per tonne from six companies, including Archer-Daniels-Midland Co and Cargill Inc, according to two traders involved who asked not to be identified because they’re not authorised to speak to the media.
“This big sale is confirmation that Egypt needs more wheat,” Joe Lardy, research manager CHS Hedging Inc in Inver Grove Heights, Minnesota, said by phone. “It also signals that Russia has plenty of wheat and will keep exporting wheat.”
Egypt is closely watched by the global grain industry not just because it buys a lot of wheat, but also because its discloses details about the purchases such as price and origin, providing a reliable benchmark for physical trading.
Egyptian officials and traders are spending more time than usual haggling over wheat prices as a shortage of foreign currency makes it harder for the government to pay for imports. At the same time, traders are wary about selling to Egypt after a months-long dispute with officials over quality standards that led to rejected cargoes, conflicting information and frequent rule changes.
“After the sales snafu with the ergot fungus earlier, Egypt is now behind on purchases,” Brian Pullam, an analyst at Linn & Associates in Chicago, said by phone Tuesday. “This is a surprising large sale and indicates Egypt needs more wheat.” Egypt purchased between 120,000 and 180,00 tonnes in its two previous tenders. The latest acquisition is the largest since January 2014.
The country is expected to purchase 11.8mn tonnes in the current marketing year, down from 11.9mn in the prior season, the US Department of Agriculture said in a report earlier this month.
Benchmark wheat futures have slumped 14% this year in Chicago. Russia’s strengthening ruble is slowing international sales as it makes the grain more expensive for overseas buyers.