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Egypt to take 1.7 mil mt of US wheat amid thin Russian supply

London — Egypt is expected to take 1.5-1.7 million mt of US wheat this marketing year, July 1, 2018 to June 30, 2019 as Russian deep sea port 12.5% protein wheat becomes scarce.

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Around 800,000 mt is expected to come from the private market by the end of the marketing year:

"At least three Panamax vessels are being loaded now," a source said, while some new deals of 200,000 to 400,000 mt of wheat were reportedly negotiated for shipment to Egypt from the US Friday.

The rest of US wheat imports is expected to be purchased by GASC, Egypt's state Authority for Supply of Commodities, according to a source.

The sharp rise in the price of Russian 12.5% protein wheat due to exhausted supplies, especially at sources near port, has pushed origination costs to record levels around $250/mt, some of the highest in four years.

As a result, this has opened the arbitrage route from the US to the EMEA region due to price competitiveness in order to satisfy its 900,000 mt a month wheat consumption rate.

So far, GASC has imported 180,000 mt of US wheat in its wheat buy tenders to date since July 1, 2018. In the previous three marketing years, Egypt only imported 95,000 mt, according to S&P Global Platts data.

While imports of US wheat are usually seen in Egypt's private market each year, sources said it is unusual to see it so early in a marketing year.

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Nonetheless, there is a time hurdle for buyers in Egypt to factor in, which could see those who are very short revert back to the Black Sea.

US Gulf Coast shipment can take around 21 days; this falls to six days if loaded in the Black Sea.

However, with most wheat at port silos already committed, buyers are struggling to find cargoes.

--James Colquhoun, james.colquhoun@spglobal.com

--Edited by James Leech, newsdesk@spglobal.com