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Russian wheat price pressures others: Egypt

Cairo, June 29, 2010

Egypt's main wheat buyer said Russian prices were putting pressure on French and US suppliers and the world's biggest wheat importer was keen to seek out a wider range of origins for the grain.

Egypt's international tenders are keenly contested by major exporters such as France and the US, while Russia has been the biggest single supplier this year. However, other producers, like Poland, have eyed the Egyptian market.

"The US suffers from competition against Russia ... The issue is not wheat quality because the US enjoys good wheat quality, as good as the Russian. The problem is prices and prices of landed costs," Nomani Nomani, vice chairman of Egypt's General Authority for Supply Commodities (GASC), told Reuters.

Egypt tightened terms in June for tenders, a move some European suppliers said would complicate procedures and add costs even though the changes were not major.

"We standardised tender terms to treat all providers equally ... That way, price is the only gauge in determining tender results," he said, adding the new terms would broadly stay in place for some time.

He and other Egyptian officials have not given details. But European traders said they included tighter phytosanitary requirements and demands for faster loading.

A 2009 requirement to load full cargoes at a single port has also stayed despite complaints from French suppliers who said only one French port had this capacity.

Diversity

"Egypt used to bear additional costs of another port for no reason," Nomani said.

"(Russia) was ready (to load) at one port ... same wheat, same timings, same specifications ... I save costs," he said, adding that Russia was "worrying for all other origins."     Russia supplied 60 per cent of Egypt's 5.53 million tonnes of wheat purchases in the 12 months ending on June 30. France was the second biggest supplier at 27 per cent, followed by the US at 7 per cent.

In a bid for diversity, GASC would consider adding Poland to its suppliers if it met GASC requirements, Nomani said, adding he had discussed the issue with the Polish ambassador.

"One basic rule we have is to diversify origins to ensure competitiveness and to purchase the grain at the lowest prices possible," Nomani said.

Syria has supplied Egypt in the past but drought has hit its harvests. "If Syria has a surplus in production again, I can add it to the list," he said.

Egypt relies on foreign wheat supplies for about half its annual needs of about 14 million tonnes. Consumption per capita remains among the highest in the world at 180 kg per person per year, more than double the worldwide average, Nomani said.

"Egyptian citizens' dietary awareness is starting to grow ... We've found recently that average (bread) consumption, despite population growth, is on the decline," Nomani said.

Many Egyptian rely on subsidised bread which is purchased by the state buyer. – Reuters




Tags: Russia | Cairo | wheat | prices | GASC |

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