Saudi Arabia's state grains authority has bought 440,000 tonnes of wheat at an average $256.2 per tonnes, a senior authority official told Reuters on Monday. The origin of the wheat has not been disclosed. The Grain Silos and Flour Mills Organisation (GSFMO) bought a total of eight cargoes, five of which are to be unloaded at the Red Sea port of Jeddah and three at the eastern port of Dammam, the official said.
Six of the cargoes contained wheat with a 14 percent protein content which was purchased at $261.83 per tonne c&f. The two other cargoes contained 12.5 percent protein wheat which was bought at $242 per tonne c&f. GSFMO awarded four of the cargoes to Bunge SA, three to Toepfer International and one to Nobel Resources, he added. The wheat was for delivery in March and June. European traders said they believed European Union and possibly some Russian wheat would largely be delivered for the Saudi purchase.
"US and Canadian wheat is currently too expensive," one trader said. "US wheat was up to $20 to $22 a tonne more expensive than EU in fob terms and freight shipping costs from the US are about $15 to $18 a tonne higher than from Europe." "This is too large a difference to overcome."
Canadian wheat was offered more aggressively at about $15 to $20 cheaper than the US but the Canadian freight disadvantage was also too large. Some of the 12.5 protein wheat could be sourced from Russia but EU supplies of 14.5 protein wheat were cheaper than Russian, traders added.
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