Saudi buyer eases rules, opens door to Black Sea grain

CAIRO/MOSCOW: Saudi Arabia’s state grain buyer SAGO will relax its bug-damage specifications for wheat imports from its next tender, it said on Thursday, in a move seen opening the door to Black Sea imports.

SAGO is relaxing its limits for bug-damage in hard wheat to 0.5% from 0% from its next tender, governor Ahmad Al Fares told Reuters.

Black Sea origin wheat, which has been unable to meet Saudi’s specifications for zero bug damage, may now be offered at the next purchase tender, he said.

Russia has sought access to Saudi Arabia’s wheat market for a long time as part of Moscow’s bid to take further market share from the European Union and United States in the wheat markets of the Middle East and North Africa.

Russian President Vladimir Putin’s upcoming visit to Saudi Arabia in October and cooperation between the two countries boosted by the recent OPEC and non-OPEC oil output deals have become an additional stimulus for wheat talks, a Russian official, who asked not to be identified, told Reuters.

Russia interprets this move as a green light to go ahead and start supplies, he added.

“If the market was rational, then the first tenders will be offered with a risk premium, as you do not know how they will treat Russian wheat on arrival. But I expect that the tender will be discounted below replacement and it will be a dogfight,” a European trader said.