US grain suppliers are likely to start winning tenders to sell wheat to Egypt in February, when Russian wheat loses its competitive edge and Argentina retreats from the market, an official with a US industry group said on Thursday. Egypt, the world's largest wheat importer, has relied heavily on wheat from the Black Sea since the start of the fiscal year on July 1.
US soft white wheat prices offered in the latest tender to Eygpt's main buyer, the General Authority for Supply Commodities (GASC), on December 13 were cheaper on a free on board basis (FOB) than Argentine wheat. The offer for soft white wheat stood at $225.64 a tonne, while GASC purchased Argentine wheat at $226 per tonne FOB.
"US wheat prices are going to be more competitive ... We are sitting on a lot of wheat, and come February, that's when I see our sales picking up," Richard Prior, US Wheat Associates regional vice president for the Middle East and North Africa, told Reuters.
GASC has bought around 3.36 million tonnes of Black Sea origin wheat since July 1 and has started buying Argentine wheat this month, purchasing up to 240,000 tonnes. "Argentina is buying itself into the market now. Russia was buying itself into the market from August until around November, but now they are starting to be a bit more conservative," Prior said.
"Our wheat was just around a dollar more expensive when you added freight," Prior said. "We knew we were getting competitive on price, and we could see we might be in the ball game." The United States, once a major supplier of wheat to Egypt, has taken a back seat in recent years to Black Sea wheat, which has been priced more competitively and costs less to ship given its vicinity to North Africa.
Egypt spends billions of dollars on wheat purchases every year, so price is a major factor in GASC tenders. In the fiscal year that ended on June 30, Egypt spent around $5.5 billion on food subsidies, the bulk of which were on wheat. The most populous Arab country consumes around 14 million tonnes of wheat annually and imports half of its needs. Even as the economy falters and foreign reserves tumble after the uprising that toppled president Hosni Mubarak in February, Egypt's wheat purchases are expected to remain steady.