Egypt's state grains buyer, the General Authority for Supply Commodities (GASC), announced the results of its latest wheat tender early last week.
Yet again, Russian origin remained too expensive to participate.
The GASC sought an unspecified quantity of soft and/or milling wheat in 55-60,000 tonne bottoms from global exporters for shipment in the October 15 to October 25 window and payment by 180-day letter of credit.
Eligible origins were listed as the United States, Canada, Australia, France, Germany, Poland, Argentina, Russia, Kazakhstan, Ukraine, Romania, Bulgaria, Hungary, Paraguay and Serbia.
Following the close of tenders at noon local time last Monday, the GASC announced it had purchased 180,000t.
This was made up of 120,000t from Romania and 60,000t from the Ukraine.
There was 60,000t of Romanian wheat bought at US$308.50 per tonne free on board (FOB), plus US$29.60/t ocean freight, totaling US$338.10/t (cost and freight).
Another 60,000t of Romanian wheat went for US$308.50/t, plus US$34.43/t freight, totaling US$342.93/t (cost and freight).
And 60,000t of Ukrainian wheat was purchased at US$304.25/t, plus US$36.08/t freight, totaling US$340.33/t (cost and freight).
These purchases mirror the quantities and origins in the GASC's previous tender for October 5 to October 15 shipment, with the same payment terms.
Those results were announced on August 18, with the successful offers from Romania and the Ukraine.
They were for 60,000t of Romanian wheat at US$294.99/t FOB, plus US$34.43/t freight, for a total of US$329.42/t (cost and freight); 60,000t of Romanian wheat at US$297.00/t FOB, plus US$34.43/t freight, for a total of US$331.43/t (cost and freight); and 60,000t of Ukrainian wheat at US$297.95/t FOB, plus US$35.94/t freight, for a total of US$333.89/t (cost and freight).
Just two weeks earlier, the GASC purchased a 60,000t cargo of Romanian wheat at US$261.49/t FOB, plus ocean freight of US$32.25/t, giving a landed price of US$293.74/t (cost and freight).
Egypt is the world's biggest wheat buyer, making its purchase prices quite an accurate and fascinating barometer of changes in global export values.
In the three tenders in August, the average FOB price rose by US$45.59/t - or 17.4 per cent.
The average cost of ocean freight from western Black Sea ports to Egypt increased by 3.5pc to US$33.37/t.
But it did fall 4.5pc - or US$1.56/t - between the second and third tenders.
This puts the rise in Egyptian cost and freight wheat values across August at a staggering US$46.71/t - or 15.9pc.
The surge comes at a time when prices are traditionally burdened by the weight of new crop supply from the Northern Hemisphere harvest.
But poor harvests in Russia, Canada, the United States and France have tightened global supply considerably, especially in the higher protein milling wheat category.
The fascinating point here is that, despite the significant rise in the GASC tender prices, Russian origin wheat is still well out of the money.
It was more than US$12/t off from the cheapest tender price on a FOB for FOB basis.
The lowest lowest Russian offers were reported to be US$315/t and US$317.90/t FOB.
With freight of US$35.75/t, the Russian cost and freight price averaged US$352.20/t. This was US$11.75/t - or 3.5pc - higher than the average buying price in the tender.
Another curious outcome of the tender was Ukraine seriously discounting its single successful offer.
At US$353.25/t, its second-best offer was US$12.92/t more expensive than its lowest - and US$2.50/t more than the cheapest Russian origin offer.
Ukraine already has an extensive export program on its books, and plenty of options for its quality wheat.
So, it is unlikely it will need to be as aggressive in future GASC tenders.
French origin wheat was even further away at US$368.10/t (cost and freight).
Its FOB price of US$315.85/t was very similar to that of Russia.
But freight is the killer for French wheat exporters.
At US$52.25/t, it is US$16.50/t - or 46.2pc - more than the cost of freight out of Russia, and US$24.35/t - or 82.3pc - higher than the cheapest Romanian offer.
A freight disadvantage of that scale means it is hard to see French wheat winning much of the GASC business this season.
Russian wheat export prices rose for the seventh consecutive week last week.
Farmers were holding tight in a rising market and exporters were eager to buy ahead of another increase in the floating export tax.
Russia launched its formula-based duty for grain exports in June this year as part of government measures to stabilise domestic food inflation.
The switch to a formula means the tax automatically rises in response to any price increases, and is currently set at 70pc of the difference between a government/market determined base price and US$200/t.
The tax started at US$28.10/t in the week beginning June 2, and last week Moscow announced that the tax for the week beginning September 8 had been set at US$46.50/t.
That is an increase of 65.5pc since its inception, and reflects the rise in Russian export values over that time.
Russian consultancy Sovecon shaved another 0.8 million tonnes from its forecast Russian production last week to stand at 75.4 million tonnes.
This followed a 5.9 million tonnes downward revision to 76.4 million tonnes in the second week of August.
The Ural and Volga regions of the country suffered greatly due to a dry and scorching summer, according to Sovecon.
The Ural area may harvest its lowest crop since 2012, and the Volga since 2014.
Both regions only received between 50 and 80pc of their average rainfall during the past three months, and temperatures were 3-5°C above average.
Sovecon also cut its forecast for Russian wheat exports in the 2021-22 marketing year by 3.2 million tonnes to 33.9 million tonnes, which would be the lowest level since 2016-17.
This was on the back of lower production, slow shipments and stiff competition from other Black Sea exporters, such as the Ukraine and Romania.
Russian wheat exports were reported to be about 3.1 million tonnes last month, which was 20pc lower than the August average for the past three years.
The export tax uncertainty puts Russia out of the GASC game for the time being.
France is eliminated due to freight, and the Ukraine does not need to discount to find homes for its exportable surplus in a season when its primary European competitors have had a poor harvest.
The question is how long can Romania continue to carry the can?
