Home / Commodities / Freight News / Algeria set to buy Russian wheat in tender purchase, traders say

Algeria set to buy Russian wheat in tender purchase, traders say

Algeria is set to take a substantial amount of Russian wheat in an import purchase of between 700,000 and 800,000 tonnes, after the country changed tender terms to reduce its reliance on French supplies, European traders said.

In latest assessments, traders estimated the volume of milling wheat booked by Algerian state grains agency OAIC in this week’s tender at between 720,000 and 750,000 tonnes.

Some estimates earlier on Wednesday pegged the volume slightly higher around 800,000 tonnes.

Purchase prices were still put at $382.50 to $384 a tonne, including cost and freight (c&f), in line with initial reports following Tuesday’s tender, traders said.

Around 270,000 tonnes of OAIC’s purchase were expected by traders to be sourced from Russia, which would mark a breakthrough for Russian exports to Algeria.

“Ships are being sought today to transport wheat from Russia to Algeria,” one trader said. “There is market talk that maybe a third of the total purchase on Tuesday could come from Russia.”

A relaxation of OAIC’s bug (insect) damage limit in late 2020 led to a small number of Russian shipments in recent months.

Terms for the latest tender showed the bug damage limit had been increased further, to 1% maximum from 0.5% previously, raising expectations of more offers of Russian wheat.

Algeria is the main export market for European Union wheat, particularly France.

French wheat was not expected to claim any sales in this week’s tender, with OAIC focused on widening its range of supplies after multi-year highs in international prices, traders said. GRA/EU

Poland, Germany and Argentina are seen as likely to be among the other origins supplied for the new purchase, traders added.

“Algeria can push prices down by reducing their dependency on French wheat,” another trader said. “At times of such high wheat prices increasing competition will no doubt cut Algeria’s purchase costs.”

Algeria does not release results of its tenders. The origin of the wheat bought by OAIC is at the seller’s option, which means the supply countries can be uncertain until loading.

The wheat was sought for shipment in three periods from the main supply regions including Europe: in 2021 between Dec. 16-31, and in 2022 between Jan. 1-15 and Jan. 16-31.

If sourced from South America or Australia, shipment is one month earlier.
Source: Reuters (Reporting by Michael Hogan in Hamburg, Gus Trompiz in Paris, Sybille de La Hamaide in Geneva and Polina Devitt in Moscow; Editing by Amy Caren Daniel and Emelia Sithole-Matarise)

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