ABU DHABI: Egypt bought 475,000 tonnes of Black Sea origin wheat on Thursday, an unusually large purchase at a single tender which traders said was probably because it wanted to stock up in case Russia imposes any export restrictions.
The General Authority for Supply Commodities (GASC), the state buyer of the world's biggest wheat importer, bought Russian, Romanian and Ukrainian wheat, with 300,000 tonnes for Oct. 21-31 shipment and 175,000 tonnes for Nov. 1-10 shipment.
The only other origin offered at the tender was from France, but GASC bought no wheat from there.
Wheat futures on the Chicago Board of Trade extended gains on Thursday after GASC's purchase, jumping more nearly 1 percent after the announcement was made.
Some traders suggested that the size of this order and a previous big order on Saturday, when it bought 355,000 tonnes of wheat from the same origins, alongside rising Black Sea prices, could prompt GASC to start buying European or U.S. wheat soon.
GASC Vice Chairman Nomani Nomani told Reuters after the purchase that rising prices of Russian wheat would make other origins more price competitive and said he wanted more clarity about how much Russian wheat would be available for export.
"The meeting point between the pricing of various origins is definitely getting closer, that I can say for sure," he said.
"We can see that the Russian bids were much less for November shipment ... That means that more purchases from France during that period will be very probable," he added.
Traders had said at the start of the month that major importers would quickly buy up Russian wheat in coming weeks, wary of the drought-hit country's plans even after the key global supplier said it would not restrict grain exports.
"It was striking that Egypt received offers for 300,000 tonnes of Russian wheat for shipment before the end of October and only 120,000 tonnes for shipment from November, when people are starting to expect Russian export restrictions," one German trader said.
"I think Egypt and other importing countries want to get as much Russian wheat into their warehouses as possible before the Russians take any action to hold exports back which is perhaps why Egypt tendered again so quickly after its last purchase on Saturday," he said, adding that when Russia imposed a grain export ban in 2010 existing contracts were not met.
Russia's government, coping with a drought which has slashed grain yields by more than a quarter, said on Friday it would not restrict grain exports even if its exportable surplus was exhausted.
GASC's Nomani gave the breakdown of Thursday's purchases as follows:
He listed shipments for Oct. 21-31 as:
- 60,000 tonnes of Russian wheat from Olam at $327.45/tonne and freight of $11.48/tonne.
- 60,000 tonnes of Russian wheat from Glencore at $328.85/tonne and freight of $11.94/tonne.
- 60,000 tonnes of Russian wheat from Toepfer at $328.85/tonne and freight of $11.97/tonne.
- 60,000 tonnes of Russian wheat from Soyuz at $330.64/tonne and freight of $11.97/tonne.
- 60,000 tonnes of Romanian wheat from Toepfer at $333/tonne and freight of $11.30/tonne.
He listed the shipments for Nov. 1-10 as:
- 55,000 tonnes of Ukraine wheat from Venus at $329.51/tonne and freight of $13.40/tonne.
- 60,000 tonnes of Russian wheat from Glencore at $332.89/tonne and freight of $11.97/tonne.
- 60,000 tonnes of Romanian wheat from Bunge at $336.33/tonne and freight of $11.25/tonne.
During the 2011/12 fiscal year, GASC's purchases were dominated by Black Sea origin wheat.
GASC purchased 3.24 million tonnes of Russian wheat, 180,000 tonnes of Romanian wheat, 360,000 tonnes of Ukrainian wheat, 60,000 tonnes of Russian, Ukraine or Kazakh wheat at the seller's option and 60,000 tonnes of Russian or Kazakh wheat at the seller's option during the 2011/12 fiscal year.
It also bought 300,000 tonnes of French wheat and 300,000 tonnes of Argentine wheat as well as 530,000 tonnes of U.S. soft red winter wheat and 60,000 tonnes of Canadian wheat.