Wheat demand rush at French port triggers price rise for Egypt

By Valerie Parent PARIS (Reuters) - A rush in demand to ship wheat from the France's northwest port of Dunkirk, one of the most competitive gates to export grain to Egypt, has contributed to a penalising rise in French wheat prices, traders said on Thursday. But Egypt, the world's largest wheat importer, may have little choice than to pay a French premium in its next tenders because of shrinking supplies from other exporting countries and Cairo's vessel size and wheat quality requirements. While Egypt's state buyer GASC bought 180,000 tonnes of French wheat for December 1-15 shipment at a tender last week, it rejected French offers this week because of high prices. GASC argued it may have to resort to use imported stocks available in the local market. French wheat prices have risen lately in tandem with concern over potential congestion at Dunkirk, one of the sole deep-water ports in the country able to handle a 60,000-tonne Panamax, a vessel type requested by Egypt. The region surrounding the port also offers good export quality wheat this season. The inland port of Rouen, the European Union's largest wheat export hub, cannot yet accommodate a 60,000-tonne Panamax. Works to deepen its channels will not be completed before 2015. And the wheat-growing region around the La Pallice port on the Atlantic coast, which can also handle Panamax, has suffered quality problems, notably poor protein levels, a key criteria for exports to Egypt. "We are limited. Not all French ports allow exports to Egypt," a French trader said. Traders can offer wheat from one or two ports in tenders by Egypt's state buyer GASC but when possible traders prefer to stick to one port to curb freight and inspection costs. Potential congestion at Dunkirk has caused wheat delivered from the port to surge by 4 to 4.5 euros a tonne for Dec/Jan delivery since the start of November. With supplies drying up in exporting nations such as Romania, Russia, Ukraine and the United States, and Egypt's importing needs of some 10 million tonnes this season, Cairo's options may be running out. "French wheat is the only long-term solution to meet Egypt's needs," another trader said.