London — Egypt state grain importer GASC announced June 1 its first wheat tender of the 2020-21 marketing year (July-June) will take place on June 2, according to GASC website.
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GASC is seeking its usual 55,000-60,000 mt cargoes of optional origin for July 10-25 loading period with payment at sight letter of credit as oppose to the usual 180-days letter of credit payment.
The timing of the world's largest wheat importer's first tender came as a surprise to some market participants as local procurement of wheat of new crop (2020-21) stood at 3 million mt as of May 29, and is expected to reach 3.6 million mt, a 14% year on year increase, according to a statement issued by the supply ministry.
GASC's first tender of the marketing year comes at a difficult time period in terms of supply as the harvest season in the Black Sea region, the main source of Egyptian wheat imports, may kick off with some delays.
"The usual period for winter wheat harvest in the Black Sea is early July-late August, yet each season is different in its temperature and precipitation regime, which shifts the normal harvest window," S&P Global Platts Analytics said in report published May 20.
Dry weather conditions across Western Europe and Southern parts of the Black Sea is expected to negatively affect wheat production yields in the EU and Black Sea region for 2020-21 marketing year.
In addition, the start of the wheat harvest in both Russia and Ukraine is expected slightly later than the previous two years; where favorable weather conditions resulted in the first Russian new crop wheat vessel being available for export on July 4, market sources said.
Yields in the southern regions of Russia and Ukraine, where the harvest start first, may be lower than usual thus resulting in less wheat available in July.
Even though the production prospects in other regions looks promising wheat from those regions will not be available in ports before August, sources said.
"It will be most probably mainly be Romanian wheat offered for this time period," a trader said commenting on the news.
The European commission's crop monitoring service MARS lowered its 2020-21 wheat production forecast by 3.4% to 121.5 on May 28, a 7% year on year decline on the back of unusually dry and warm weather during the spring, it said.
While MARS forecast Romanian 2020-21 common gross wheat production to drop to 9.2 million mt from its all-time high of 10 million mt in 2019-20, market sources believe the number to be lower due to severe drought hitting major producing regions.
US Department of agriculture USDA forecast 2020-21 Ukrainian wheat production 4% lower at 28 million mt, compared with 2019-20 season, a report published on May 20 showed, which also is seen as too optimistic market sources added.
As for Russian wheat mixed weather conditions across regions is making it difficult to forecast 2020-21 wheat production with analysts' forecasts showing a significant wide range of 73.7-81.2 million mt.