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UPDATE 2-In rare move, Egypt's GASC postpones wheat tender results

Published 14/02/2016, 03:27 am
© Reuters.  UPDATE 2-In rare move, Egypt's GASC postpones wheat tender results

* GASC seeking wheat after securing only 60,000 tonnes on Friday

* Traders remain uncertain about ergot fungus rules

* GASC said Bunge offered replacement cargo for rejected wheat (Recasts with decision to postpone results)

ABU DHABI, Feb 13 (Reuters) - Egypt's state grain buyer asked suppliers on Saturday to extend the validity of their offers in its wheat tender until Sunday when it will continue talks and announce results, in a rare move reflecting its struggle to secure wheat amid a row over quality control.

Egypt, the world's largest wheat importer, only received four offers at its international tender to buy the grain on Saturday as suppliers remained reluctant to sell to it following concern about limits on imports of wheat containing the ergot fungus.

State grain buyer GASC's vice chairman told Reuters the extension was possible as global markets are closed on Sunday, meaning prices will not move.

Participation in Saturday's tender by international grain trading houses was even lower than one on Friday, when five offers were made, and much lower that at tenders in the past few months.

The lowest offer presented was for French wheat at $186.50 a tonne free-on-board (FOB) and $194 a tonne cost and freight (C&F) by Soufflet, traders said.

The remaining three offers were for Russian wheat, two cargoes by Union Co. and one by Aston.

Still, traders said there was a technical issue with the French freight price of $7.50 a tonne and it could be rejected making Russian wheat the cheapest on a cost and freight basis.

Suppliers have been presenting offers to GASC with a risk premium added to the price for the past two tenders on the back of uncertainty about the allowed limits of ergot, a grain fungus found in wheat worldwide.

GASC only managed to buy one cargo of 60,000 tonnes of Romanian wheat in a tender on Friday and soon after announced another wheat import tender for the same shipment period of March 10-20, reflecting Egypt's pressing need to secure more of the grain. supply ministry, which includes GASC, has usually permitted a 0.05 percent level of ergot in wheat imports. But the agriculture ministry surprised traders this year by not allowing any ergot content and rejecting a 63,000 tonne French wheat shipment supplied by global trading house Bunge. BG.N

Bunge has launched legal proceedings against Egypt over the rejected wheat. vice chairman Mamdouh Abdel Fattah told Reuters exclusively on Friday that Bunge had offered to send a replacement for the rejected vessel and that he was studying it. a bid to win back confidence, the ministries of supply and agriculture held a joint press conference on Sunday assuring suppliers their wheat shipments can contain up to 0.05 percent of ergot, a common global standard GASC traditionally used in its import tender specifications. traders said they were concerned about the lack of a written statement from the Egyptian authorities, and feared that shipments could still be rejected.

"Everyone is still waiting for that paper guarantee, if they don't have that how can they not add a risk premium," one Cairo-based trader said.

Traders said these offers were made in the GASC tender on Saturday all in dollars a tonne:

Seller

Origin

FOB price

Shipping cost

C&F Soufflet

French

186.50

7.50

194 Union Co

Russian

188.60

6.60

195.20 Union Co

Russian

189.60

6.60

196.20 Aston

Russian

191.84

6.60

198.44

Prior to Friday's purchase, GASC, the General Authority for Supply Commodities, had cancelled its previous two international purchase tenders.

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