by Agrimoney.com
World wheat trade prospects received a boost as Egypt, historically the top importer, returned to tender for the first time in four months, as second-ranked Indonesia was seen buying far more than has been expected.
Egypt's Gasc grain authority - which has historically tendered for wheat twice a month or so - on Monday revealed its first tender since mid-February after a hiatus attributed to the country's financial crisis, which has left it with little cash for foreign purchases.
The tender, for wheat for shipment between August 10-20, surprised investors, coming indeed only minutes after one broker, Brian Henry at Benson Quinn Commodities, said that "given the current situation in Egypt, I have to question just what wheat demand is going to be like from that country going forward.
"Ultimately they don't have many options to feed their people, but they're going to need plenty of help."
Stocks run down
The country has avoided imports by running down inventories and through purchases from the domestic harvest, which has proven a strong one, as in other North African importing countries such as Morocco and Tunisia.
The International Grains Council on Monday lifted by 400,000 tonnes to 9.4m tonnes its estimate for this year's Egyptian wheat harvest, representing a rise of 10.6% year on year.
Egypt's government, which a week ago said it had purchased 3.7m tonnes of wheat from local farmers so far from this harvest, has downplayed its need for imminent imports although Bassem Ouda, minister of supplies, two weeks ago did suggest that purchases might be needed before the end of June.
US Department of Agriculture staff in Cairo have cautioned over the thinness of wheat stocks, with the IGC on Monday forecasting a rise of 200,000 tonnes, to 9.0m tonnes, in Egypt's import needs in 2013-14 despite the bigger harvest.
Indonesia boost
The Gasc announcement follows a, small, victory for feed wheat exporters, after Morocco, a large importer of milling grain, confirmed that it had lifted restrictions on purchases of feed supplies too, although this market is only estimated at some 60,000 tonnes a year.
On a larger scale, Australia & New Zealand Bank on Tuesday flagged the potential for rising wheat imports by Indonesia, the second-ranked buyer after Egypt, driven by the soaring prices of other foods, including rice.
"High food inflation in Indonesia favours higher wheat consumption," Paul Deane, ANZ senior ag economist, said, noting that consumer price inflation is running at 11%, "driven by rising fruit, vegetable, fish and meat prices".
"With higher fuel prices and non-cereal food inflation sweeping through the Indonesian economy, consumers are likely to be particularly cost conscious, favouring consumption of wheat noodle at the expense of other items."
Rice vs wheat
This extends to a preference too for wheat over rice, which is some $425 a tonne more expensive - a gap the bank forecast increasing to some $500 a tonne as pressure from the northern hemisphere harvest lowers wheat prices.
"Seasonal factors should keep Indonesia rice prices supported while wheat prices are expected to still fall further," Mr Deane said.
As an extra boost to wheat import prospects, there is talk that Indonesia may extend a duty hike on flour imports in favour of protecting the domestic milling industry, whose capacity is expected to top 10.0m tonnes this year with the opening of two new mills.
Indonesia's imports will rise by 15% year on year, or some 1m tonnes, over the next 12 months.
The IGC forecasts Indonesian imports in 2013-14 of 6.8m tonnes, a rise of 200,000 tonnes.
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