Saudi ten­der not all roses

South Burnett Times - - RURAL WEEKLY - PETER McMEEKIN Nidera Aus­tralia

IN OC­TO­BER last year Saudi Ara­bia’s state grain buyer, the Saudi Grains Or­ga­ni­za­tion, as­sumed re­spon­si­bil­ity for the pur­chase of the state’s wheat and feed bar­ley re­quire­ments.

Last week it an­nounced the re­sults of its se­cond ten­der, buy­ing 1.5MMT of feed bar­ley for ar­rival from se­cond half March through to first half May.

A to­tal of 22 com­pa­nies from across the globe par­tic­i­pated in the ten­der with 25 op­tional ori­gin pana­max (60,000 met­ric tonne) car­goes booked in the deal.

Aus­tralia, South Amer­ica, Euro­pean Union and Black Sea were the nom­i­nated ori­gins.

Ac­cord­ing to SAGO, around 1.2MMT will be shipped to Saudi Ara­bia’s Red Sea ports with val­ues rang­ing from US$185.81 to US$193.99 C&F.

The bal­ance will be dis­charged at Per­sian Gulf ports at val­ues rang­ing from US$190.91 to $195.88 C&F.

Prices are higher than the first ten­der back in De­cem­ber with Red Sea and Gulf val­ues up around US$3 and US$10 re­spec­tively.

Un­der SAGO, the Saudi Ara­bian ten­ders have changed from load dates to ar­rival dates, adding risk from an ex­porter’s view­point.

Ad­di­tion­ally, both of the ten­ders to date have been for nearby po­si­tions, which means they are ef­fec­tively pay­ing a pre­mium as ex­porters build the pos­si­bil­ity of de­lay penal­ties into their of­fers.

From an Aus­tralian ori­gin per­spec­tive, there are sev­eral key points to note.

Price is not the lim­it­ing fac­tor here as South Aus­tralian bar­ley is the cheap­est in the world right now and works com­fort­ably into the Saudi sales.

It ap­pears to be stem ca­pac­ity that is lim­it­ing the abil­ity of Aus­tralian ex­porters to par­tic­i­pate mean­ing­fully.

Aus­tralian ports cur­rently have an ex­tremely busy ex­port pro­gram and most ship­ping slots have al­ready been al­lo­cated.

Ex­porters who have bought ship­ping slots can­not af­ford to hold them back on the chance that they may win Saudi ten­der busi­ness as the cost of for­feit­ing the el­e­va­tion ca­pac­ity is ex­tremely high.

Fur­ther­more, the pana­max ca­pa­ble ports are the ones with the most stem pres­sure, there­fore they have less un­al­lo­cated ca­pac­ity.

An­other fac­tor here may well be the cur­rent low price en­vi­ron­ment.

There cer­tainly seems to be some re­luc­tance in grower land to en­gage the mar­ket at the cur­rent val­ues.

This is be­ing re­in­forced on the east coast where ex­tremely hot and dry con­di­tions are en­cour­ag­ing the grower to hold and wait for a pos­si­ble mar­ket rally.

While cur­rent val­ues should buy ex­port busi­ness, the com­bi­na­tion of lim­ited avail­able el­e­va­tion ca­pac­ity and lack of sell­ing makes it dif­fi­cult for ex­porters to book new busi­ness.

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