Saudi Kingdom making the most of sudden grain price plunge
Saudi Arabia's state grains buyer is tendering to purchase 275,000 tonnes of milling wheat in five cargo arrivals between May 10th and June 30th, Middle Eastern and European traders said on Wednesday.
Traders said the Saudi Kingdom was seeking to capitalise on a bearish market after European wheat futures fell as much as 7 percent before rebounding on Wednesday.
A global grain market sell-off this week has pushed Egypt to buy 235,000 tonnes of US and French soft wheat on Wednesday, and also prompted Tunisia to come to the market for 75,000 tonnes of milling wheat.
News that Arab grain importers were back in the market encouraged investors to buy back, and Euronext May wheat contract was up 2 percent to 248 euros a tonne by 1426 GMT.
Saudi Arabia's Grain Silos and Flour Mills Organisation (GSFMO) is looking for wheat with a 12.5 percent protein content, in a new sign that higher-quality wheat is becoming harder and pricier to find in global markets.
By cutting quality requirements, Saudi Arabia, which has mixed 14 percent and 12.5 percent protein content in its last purchases, is trying to attract more offers, in particular from the US, traders said.
Close of bids set in the tender is Friday Feb 25.
Saudi Arabia had been widely expected to tender in recent weeks and traders said the tender documents specified some 165,000 tonnes for arrivals requested in Jeddah between May 10-June 30, and 110,000 tonnes to Dammam between May 15-June 20.
Saudi officials said earlier this month they planned to import around 2 million tonnes of wheat in 2011 like last year and will boost imports in coming years as it ends local production.
Saudi Arabia wants to build up reserves of basic commodities such as wheat, rice, oils and sugar to counter a global spike in food prices. The arid desert kingdom hopes to double its wheat reserves to a year's worth within three years.