Algeria's OAIC buys 388,000 mt of wheat, France likely origin

Algeria’s state grain agency OAIC paid an average of $229.39/mt for 388,000 mt of milling wheat at tender Wednesday, with France the most likely origin, according to market sources.

OAIC, which does not talk to the media, paid around $5/mt more than the $224.18/mt it paid in February as it booked 120,000 mt from Bunge for $229/mt CIF, 120,000 mt from Soufflet at $229.50/mt, 90,000 mt from Glencore at $230/mt, and 58,000 mt from CAM at $229/mt.

France is the most likely origin, with 11% protein milling wheat currently offered at $210/mt FOB Rouen for April-May shipment, with freight to Algeria put at $19/mt by market analysts ISM.

Other suppliers to Algeria appear to be out of the money in the spot market, with Argentinian 12% protein wheat at $223.75/mt FOB Up River, while US 11% protein HRW is priced at $218.25/mt FOB US Gulf.

ISM assesses freight for a handysize vessel to Algeria at $37-38/mt from Argentina and $39-40/mt from the US Gulf.

Other potential origins, such as Russia and Ukraine, are unable to meet OAIC's maximum bug damage limits.

Bright spot

France is the one positive in what has otherwise been an underwhelming year for EU wheat exporters, having sold just 5.21 million mt this season.

The EU, meanwhile, had shipped out 14.27 million mt as of last week – a drop of 23.2% from the same stage last year as sellers have struggled to compete with Russia and compensate for a stronger euro.

Algeria is the EU’s biggest buyer of wheat, having bought 3.11 million mt in the 2017/18 marketing year – down 4.4% year-on-year – almost all of which came from France.