(Bloomberg) -- Major wheat importer Egypt made its biggest purchase in two years, in another sign that slumping grain prices are boosting demand.
The country’s state buyer booked 770,000 tons in a tender on Tuesday, the largest such deal since June 2022, according to data compiled by Bloomberg. Most supplies will come from Russia, the first time the world’s top exporter has dominated sales to Egypt in a tender for the new season.
It’s further evidence that a rout in crop markets is rekindling demand, especially for nations that ship in supplies to help feed their citizens. Higher wheat prices earlier this year had led to more prudent buying, but futures have since slipped to approach a four-year low on better global supply prospects.
Benchmark futures gained as much as 1.5% in Chicago on Wednesday.
While Egypt typically makes large purchases around the start of the Northern Hemisphere harvest, this week’s tender highlights Russian exporters’ willingness to sell and that recent weather setbacks may not have hurt Russia’s crop as much as thought, said Jean Charzat, a consultant at JVC Swiss.
“On top of that, the tender shows how uncompetitive European wheat is despite a decent crop under harvest,” he said.
Traders selling Russian cargoes were free to offer at any price in Egypt’s tender on Tuesday and its prior one, according to people familiar with the matter, who asked not to be identified. In recent months, Moscow had tried to enforce an unofficial price floor for exports and there were often multiple traders offering identical prices for Russian supplies in Egyptian tenders.
In the first three Egyptian wheat tenders for delivery for the season that began this month, purchases were mostly made for Bulgarian, Romanian and Ukrainian supplies.
Russia’s agriculture ministry didn’t immediately respond to a request for comment.
Also this week, Jordan purchased wheat for the first time since June, while Algeria is seeking supplies in a tender. And in other crop markets, China is snapping up Brazilian soybeans at rapid speed to take advantage of low prices, Bloomberg reported.
--With assistance from Abdel Latif Wahba.
©2024 Bloomberg L.P.
