UAE denounces attack at French consulate in Jeddah    Ismaily sign Angolan forward Ary Papel    Elite sport to continue in France despite lockdown: Sports Minister    Al-Azhar condemns terror attack in Nice: reaffirms 'religions are innocent of these criminal acts'    Leipzig face major Bundesliga test after European mauling    49 coronavirus cases recorded in schools out of 25 million students: Egypt's education minister    Pompeo, in Indonesia, renews China attacks as US vote looms    The US at the brink of chaos    UK doing everything it can to avoid national lockdown, minister says    Tunisian parliament, cbank chief tell govt to cut spending plans    In Photos: Egypt collector accumulated over 100 vintage cars    Egypt extends deadline for reconciliation requests in building violations to 30 November    El Gouna Film Festival sheds light on digital media in the wake of COVID-19    Parliament's ‘driving force'    The Senate and the return of party politics    Sculptor Tarek Zabady, tamer of difficult materials    GERD: In quest of meaningful negotiations    Egyptian child Maysarah wins Austria 2020 'Person of the Year' award    Egyptian insurance companies' premiums 9.6% up in five months    Egypt's President Sisi names new head of anti-corruption watchdog    Egypt's offers 18 bln pounds T-bills on Sunday    EgyptAir offering discounts for some international flights    Egypt records 212 new coronavirus cases, 14 deaths on Saturday    Egypt to require PCR coronavirus tests for airport travelers    Egypt sends 125 tonnes of glass by sea to Beirut    Legend Messi officially wants to leave Barcelona, hands transfer request    Global smartphone sales drop 20% in Q2, yet Apple's iPhone sales steady    Sisi: Egypt keen on establishing development projects with Iraq, Jordan    Egyptian megastar Amr Diab releases new hit music video    Making of Harry Potter will be available for fans at new park in Tokyo    Egypt's Senate elections official results to be announced Wednesday    Netflix Egypt is bringing megastar Amr Diab back with a new original    Egypt reopens Rafah border crossing for first time since April    Egypt's senate elections 2020 trending on social media in few days    African Champions League final will be played on Oct. 16-17, CAF says    No room to delay Egyptian Premier League games – EFA's board member    The Facebook Preacher's Search for Fame, and Egypt's Economy    Egypt calls on UNSC to address oil spill risks off Yemen coast    Egypt economically strong in face of COVID-19, reforms ongoing: International Cooperation Minister    Arafa Holding reports $144,000 COVID-19-related losses in April    Egypt's efforts in Libya to activate free will of Libyan people: Al-Sisi    Hyksos campaigns were internal takeover, not foreign invaders: study    COVID-19 affects Egypt sporting clubs    COVID-19 will soon turn to seasonal like swine flu: Presidential Health Advisor    ‘Egypt's Support' coalition convenes to discuss its Senate election list    Robbery attempt leads to discovery of Ptolemaic monuments in Qena    Flouting international guidance, Ethiopia unilaterally starts filling its Nile dam    Zaha speaks out after online racial abuse    

Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.

Black Sea wheat tightens grip on Egypt imports
Published in Daily News Egypt on 26 - 02 - 2010

CAIRO/PARIS: Russia is reinforcing its lead in wheat shipments to Egypt and its grain export push may be emulated by other Black Sea producers, further squeezing US and European sales to the world s top wheat importer.
Russia is pressing ahead with investment in grain infrastructure, including a new terminal at the Black Sea port of Tuapse, that could increase its price advantage and may help the country overtake Europe as the world s second largest wheat exporter after the US
After a brief hiccup in sales to Egypt last year in a row over quality of certain cargoes, Russian wheat quickly resumed its dominant position of recent years in supplying the North African country.
While other longstanding suppliers like France and the United States are unlikely to disappear from Egypt s tenders, with state buyer GASC intent on maintaining stiff competition, they could be confined to a fringe role in the face of cheaper Russian wheat and freight prices, analysts and traders said.
It s not that they (Egypt) favor the Russian wheat, said James Dunsterville at Geneva-based Agrinews. They would just buy the cheapest wheat under the tender terms and over the last two years Russian wheat has been the most competitive to Egypt.
Since the start of the current financial year in July 2009, Egyptian state s main wheat buying agency General Authority for Supply Commodities (GASC) has purchased 4.75 million tons of wheat.
More than 55 percent was from Russia while the market share for France and the US was 28.4 percent and 8.6 percent.
Russian shipments have benefited in the short term from a new rule imposed by Egypt that requires suppliers to load 60,000-ton shipments at a single port. This has hurt French exports by effectively ruling out their main grain terminal at Rouen, which is too shallow to fully load such volumes.
The changes to Egypt s tender criteria have reinforced the dominance, you could even say the stranglehold of Russia on this market, said one French exporter who sells to Egypt.
The world s no.2
Part of Russia s attractiveness to GASC has been its competitive freight rates, due to the proximity of the Black Sea to Egypt, giving it an advantage of $10 a ton over US shipments and a couple of dollars versus French cargoes.
This freight edge will be reinforced with the new terminal at Tuapse and upgrades to shallower ports like Rostov and Taganrog, together boosting Russia s export capacity by 5 million tons to 30 million tons this year.
Russia accounts for over half of the sales to GASC in the current fiscal year, after raising its exports to both GASC and private buyers to 4.9 million tons in the 2008/2009 crop year from 3.36 million tons in the year before.
US wheat has been the main victim of resurgent Russian exports, registering zero sales to GASC since early September. French wheat has still managed to keep nearly a quarter of sales.
Increased trade with Egypt forms part of Russia s ongoing expansion of its grain exports, which could get an extra boost from plans to offer subsidies to export up to 3 million tons of wheat from Russian intervention stores.
Michel Ferret, head of the markets service at France s farm office FranceAgriMer, said Russia was forecast to surpass the United States as a wheat producer in 2010 for the first time, and could soon overtake the European Union as the world s No. 2 exporter of the grain behind the United States.
Low cost producers
European and US exports may face another headache in the emergence of other Black Sea countries as suppliers to Egypt.
Black Sea are the low cost producers so there will be continued pressure on traditional exporters to maintain market share when you re talking about GASC who buys predominantly on price, said Luke Chandler, director, agri commodity markets research at Rabobank International in London.
Kazakhstan recently secured a first sale to GASC since 2008 while state company KazAgro said last month the country would export up to 1.5 million tons of grain this year to Egypt in a deal with private firm Venus International.
The oil-producing central Asian country was aiming to overcome its freight handicap towards major export markets by subsidizing the transport of local wheat.
Ukraine, currently not sought by GASC tenders because of persistent problems of bug damage, was another potential challenger in Egypt if it could boost its quality, traders said.
With Russian wheat, Kazakh wheat and in future Ukrainian wheat as well, we might have to write off this destination (Egypt) in the medium term, the French exporter said.
Nevertheless, GASC is expected to continue encouraging a range of origins to keep competition high and avoid depending wholly on Black Sea origins, which bring supply risks.
Traditionally severe weather in the Black Sea region periodically can disrupt crops and logistics, while transport remains problematic across the vast Russian territory.
The main risk is presented by very high logistic expenses like railway fees, said Andrei Sizov, the chief executive of SovEcon agricultural analysts. If competitors are in a position to lower price, shipments of quality wheat shipments (to Black Sea ports) from Siberia may halt. -Additional reporting by Gus Trompiz in Paris, Karl Plume in Chicago and Aleksandras Budrys in Moscow

Clic here to read the story from its source.