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UPDATE 1-Few offers in Egypt wheat tender as fungus row goes on
February 12, 2016 / 1:23 PM / 2 years ago

UPDATE 1-Few offers in Egypt wheat tender as fungus row goes on

(Updates with quotes, context)
    HAMBURG/CAIRO, Feb 12 (Reuters) - Egypt's state buyer GASC received only
five sales offers in an international tender to purchase wheat on Friday as
serious concern continued over tough new quality rules which have disrupted the
country's massive wheat imports, traders said.
    Participation in Friday's tender by international grain trading houses was
again low compared to tenders in past months, following concern over Egypt's
limits on imports of wheat containing the ergot fungus, traders said.
    The ergot dispute may increase Egypt's wheat import costs as tenders showed
traders are adding an additional risk premium to their offers, dealers said.
    One Cairo-based trader said most offers "have a protection premium of $10
for the French, and the Russians have a protection premium of about $6 (a
tonne)".
    The lowest offer in FOB terms was $185.25 a tonne for wheat sourced from
France, they said. The lowest offer including shipping costs was $190.88 a tonne
c&f for Romanian wheat.
    Egypt's 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.
    In 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. 
    But 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 uncertain about the ergot issue and that is why a lot
didn't present offers," a trader said.
    Another said: "With the lack of a written statement on ergot content from
the ministries, the risk remains."
    Traders said these offers were made in the GASC tender on Friday all in
dollars a tonne:
 Seller       Origin      FOB price    Shipping cost     C&F price
 Ameropa      Romania     186.55       4.33              190.88
 Cargill      French      185.25       8.98              194.23
 Soufflet     French      186.62       8.98              195.60
 Union Co     Russian     191.91       6.60              198.51
 Aston        Russian     191.99       6.60              198.59
    Smaller buyer Tunisia paid the lowest price of $178.91 a tonne c&f in a
wheat tender on Wednesday. 
    GASC, the General Authority for Supply Commodities, had cancelled its
previous two international purchase tenders amid confusion over the allowed
limits of ergot, a grain fungus found in wheat worldwide. 
    Global trading house Bunge Ltd has launched legal proceedings against
Egypt over the rejected wheat. 
    No purchase has yet been made in the latest GASC tender. Results are
expected later on Friday, traders said.

 (Reporting by Michael Hogan, Maha El Dahan, Eric Knecht, Valerie Parent and Gus
Trompiz, editing by Katharine Houreld)

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