Many origins rival for huge Saudi wheat tender

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WHEAT DEAL: Saudi has launched a tender to buy 550,000 tonnes of any-origin wheat for delivery between Dec 2009 and Feb 2010. (Getty Images)

A wide range of origins are likely to compete for Saudi Arabia's big wheat purchase tender but the euro's high value will hamper European bids, traders said on Thursday.

Saudi Arabia has launched a tender to buy 550,000 tonnes of any-origin wheat for delivery between December 2009 and February 2010 with the bidding deadline on Friday, traders said.

French traders said German wheat was in the strongest position to win the Saudi business, followed closely by U.S., Canadian and Australian.

"We'll likely to see German, Canadian and U.S. in the deal," one French trader said.

Russian wheat was also cited as a possible contender, as was Kazakh wheat in view of its high protein content.

"Saudi Arabia is not looking for a particular grade, what they want is protein," another trader said.

German wheat was in a favourable position because it comfortably met Saudi Arabia's 14 percent protein requirement, and was also likely to see aggressive bids as Germany needed new export business.

But German traders were less optimistic. "I think the high value of the euro is making German prospects bleak," one trader said. "I expect the purchase to be from a range of origins, from the U.S. to Russia, Canada and Australia."

Another German trader commented: "I think it will be largely of non-EU origin."

Saudi Arabia started importing wheat in September 2008 after the government decided to cut wheat production by 12.5 percent a year, abandoning a 30-year programme to grow its own. The kingdom decided that water was too precious to be used to irrigate desert farms.

Traders said they expected large Saudi tenders to become an established part of the international grains market.

"Although 550,000 tonnes is a hefty volume it is around the level they have bought in their previous purchases," one trader said. "I think tenders of this size from Saudi Arabia will become normal."

"They have a wheat import requirement of about two million tonnes and this year have established a pattern of tendering every three months."

In its last tender in July, the Saudi state purchasing agency the Grain Silos and Flour Mills Organization (GSFMO) bought 440,000 tonnes of wheat from a range of origins including the U.S., European Union and Canada.

In March the agency bought 495,000 tonnes largely from Canada and Germany. In January it bought 385,000 tonnes of mostly Canadian wheat. (Reuters)

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