Egyptian order puts spark into Paris wheat

Wheat prices revived in Paris, even as they softened in Chicago, after France won a second order in eight days from Egypt, the top buyer of the grain, helped by the weaker euro.

Paris wheat for March regained the psychologically important E200-a-tonne mark at one point, before losing some ground to end at E197.00 a tonne, up 1.6% on the day.

The increase, despite small losses in Chicago wheat, the world benchmark, followed Egypt's award, at tender, of a 120,000-tonne order to French wheat.

The order took to 300,000 tonnes Egypt's state grain buyer, the General Authority for Supply Commodities (Gasc), has bought so far in 2011-12 from France, after a break of six months until December in purchases from the European Union's top wheat grower and exporter.

Russian strain

The result also underlined the growing competitiveness of French wheat against rival Russian supplies, which, having dominated Egyptian trade in most of the last half of 2011, have found low prices hard to match as merchants have been forced to travel further into the interior to find grain.

Sovecon, the Moscow-based analysis group, warned earlier this week that a record pace of Russian exports since July had "caused a decline of grain stocks in southern regions as well and in some central regions badly hit by last year's drought.

"This increases expenses as grain has to be shipped from distant regions and therefore lowers the competitiveness of Russian grain."

French wheat has also been favoured by a declining euro, which on Friday reached its lowest against the dollar for 16 months, weakened by rumours that Standard & Poor's is poised to downgrade credit ratings for Austria and France, in the latest twist of the eurozone debt crisis.

A cheaper euro makes eurozone exports more competitive.

"You have to factor in the foreign exchange move into the tender result," Jaime Nolan Miralles, at FCStone's European office, told Agrimoney.com.