A drought that’s hit wheat crops across the Black Sea region and Europe has forced Egypt, the top buyer of the crop, to pay the highest price in more than three years.
Egypt’s General Authority for Supply Commodities paid $235.65 a metric tonne, according to traders familiar with the process and data compiled by Bloomberg. The government purchased a total of 420,000 tonnes of wheat for 1-10 September, said the people, who asked not to be identified because the information is confidential.
Benchmark futures traded in Chicago have surged 20 per cent this year and Paris wheat for December delivery hit a record for the contract on Tuesday. Dry weather means Russian production will fall for the first time in six years. Crops in France, Germany and the Baltic countries are also expected to be smaller.
"The major weather issues are actually in Europe and the Black Sea, and those are the major suppliers of wheat to Egypt," said Michael McDougall, senior vice president at ED&F Man Capital Markets in New York.
GASC bought 240,000 tonnes of wheat from Russia, 120,000 tonnes from Romania and 60,000 tonnes from Ukraine, the traders said. The price paid was the highest since May 2015.
Paris wheat for December rallied as much as 1.7 per cent to EUR 198 ($231) a tonne, the highest since the contract started trading in 2015. In Chicago, futures for September slipped 0.7 per cent to $5.1025 a bushel.
Egypt received offers from six companies, the fewest in tenders for delivery this season, data compiled by Bloomberg showed.
Egypt relies on subsidised bread to feed its almost 100 million people.