Egypt officials buy first Ukraine wheat since 2008

Grain officials in Egypt, the top wheat importer, fulfilled a wish to expand suppliers beyond Russia, which has scooped nearly all orders so far in 2011-12, by awarding their first contract to Ukraine in three years.

Egypt's state grain buyer, the General Authority for Supply Commodities (Gasc), on Saturday bought 120,000 tonnes of Ukrainian wheat at an average of $248.61 a tonne.

The price forced Russian supplies out of the frame at a Gasc tender for the first time since Moscow allowed them back on the international market, in July, after an 11-month ban imposed amid drought.

Gasc - which was left by the ban with unfulfilled orders, forcing it to buy replacement supplies in a bull market - has been signalling its wish to purchase wheat from outside Russia, while fulfilling its aim of buying at competitive prices.

Even so, it still leaves Egypt dependent on the Black Sea region, from which Gasc has purchased all but 180,000 tonnes of the 2.9m tonnes it has bought so far in 2011-12.

'Increasingly frustrated'

Nomani Nomani, the Gasc president, last week highlighted, unusually, that there were "no offers of US wheat" at the previous tender, adding that "'without doubt, French wheat is one of the more strategic and stable sources".

However, at $268.90 a tonne, French wheat is considerably more expensive than Black Sea supplies.

And while Argentine wheat was the cheapest at flat price at the latest tender, offered at $246.40 a tonne by Glencore, it is some $25 a tonne more expensive on shipping costs.

"Clearly, the Egyptian buying authority, Gasc, is getting increasingly frustrated that the only wheat that's being offered at realistic prices is from the Black Sea," the UK arm of a large commodities house, which deals in Black Sea grain, said.

The commodities house added: "Obviously Egypt does not wish to become totally reliant on Russian supplies and with good reason," noting a warning by Vladimir Putin, Russia's prime minister, to shippers to "'avoid signing excessive contracts", and restating a limit on grain exports of 24m-25m tonnes.

Meanwhile, Ukraine blotted its copybook with some buyers by last year imposing grain export quotas, which it followed this season with duties on shipments, which prompted hoarding domestically in expectation of a lifting of the tariffs – which were indeed removed this month.

Brazil vs Ukraine vs US

The latest Gasc order, unveiled on Saturday, represented its first order of Ukraine wheat in three years, since the country's supplies were barred on quality grounds.

Gasc earlier this month put Ukraine back on its list of potential suppliers.