Algeria's state grains agency OAIC bought at the end of last week at least 600,000 tonnes of wheat in a move seen as an attempt to boost supply amid unrest linked to rising food prices, European traders said on Monday. Algeria has seen violent demonstrations in several cities over the past several weeks against high food costs and unemployment, in parallel with demonstrations that brought down Tunisian president Zine al-Abidine Ben Ali on Friday.
OAIC's latest purchase, which was for optional-origin milling wheat for shipment in March and April, brought to about a million tonnes the volume bought by the agency this month. Some traders put the volume of the latest wheat purchase above 600,000 tonnes, with one citing 750,000 tonnes.
OAIC paid prices ranging between $360 and $365 a tonne, including cost and freight, for the wheat, traders said. "They need to buy, they are afraid of what is happening elsewhere," one trader said, referring to events in Tunisia. Official media reported earlier this month that OAIC would raise by 18 percent the amount of soft wheat it supplies each month to the local market.
"They are clearly trying to build up reserves," another trader said. The authorities have also announced cuts to import duties and taxes on sugar and cooking oil in response to rioting. Algeria is a regular buyer of French wheat, although stocks have been shrinking quickly due to France's high run of exports. The shipping timetable meant South American wheat might also be chosen for some of the volume, traders said.
Euronext milling wheat futures rose soon after the news, with front-month March up 1 percent at 253.25 euros a tonne by 1357 GMT. In its previous purchase of milling wheat, OAIC bought 350,000 tonnes of the grain on January 6 at around $353 a tonne C&F for shipment in March. In a separate tender, OAIC is also seeking to buy durum wheat, traders said on Monday, after the agency bought at least 200,000 tonnes of the grain last month.
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