Egypt buys a record amount of Russia’s bumper wheat crop

Egypt scooped up a record amount of Russian wheat Tuesday as a near-record harvest helps the Black Sea nation’s grain expand its dominance over rival suppliers.

Egypt’s state buyer booked 530,000 tons of Russian wheat in a tender, the most from the country in data compiled by Bloomberg going back to the 2012-13 season. Russia’s attractive supplies make up 80% of Egypt’s purchases so far this season, compared with about half at a similar time last year.

Russia is nearing the end of its harvest, which is expected to approach 2017’s record haul and help the nation reclaim its ranking as the world’s top exporter. In contrast, Ukraine’s crop has fallen slightly from a year earlier, and production plummeted in France and Romania, making Russian supplies more competitive.

Egypt hasn’t booked wheat from countries outside Russia since early August, and offers from the European Union have been scant in recent months. That trend may continue for a while, according to the Russian Grain Union.

“There’s potential for things to go on like that in future,” said Alexander Korbut, vice president at the union. “A very good crop is expected, and growers are increasingly interested in selling it.”

Russian grain also has benefited from the ruble’s decline against the dollar, while a stronger euro has made supplies from shippers like France less appealing. Only Russian and Ukrainian wheat was offered in Egypt’s tender Tuesday.

Russian exports are accelerating after a slow start to the season as crop estimates improve, according to Rabobank International. The country’s shipments are down 9% so far this season, according to the latest data from the government’s grain quality center.

“It’s great to have such a big buyer, especially when demand elsewhere has been rather low,” said Dmitry Rylko, director general at the Institute for Agricultural Market Studies, or IKAR. “Competitors can’t keep up with the prices we are offering.”

Still, prices rose compared with Egypt’s previous tender, which partly may reflect improving global demand, Paris-based adviser Agritel said in a note.

Tenders have picked up in recent weeks across other importers, including Turkey and Pakistan, and Jordan is seeking the grain in a tender later Wednesday. Rising agricultural purchases in China also have bolstered crop prices, and the Bloomberg Grains Spot Subindex is at a five-month high.