JEDDAH – Saudi Arabia launched a tender to buy 550,000 tons hard wheat (12.5 percent protein) from global suppliers for shipment during the period from December to February, the Kingdom's Grain Silos and Flour Mills Organization said Wednesday. The wheat will be delivered in two shipments, 275,000 tons to the Jeddah port and an equal amount to Dammam, the GSFMO said in a statement. The deadline for receiving offers is Aug. 31, it added. Wheat production growth in the Kingdom is forecast to decline 46.9 percent to 669,900 tons during the period 2015-2016 as the government goes ahead with its plan to phase out wheat production altogether in the next decade, said Research and Markets in the country's Agribusiness Report Q3 2012. The report noted that the BMI universe agribusiness market value increased 1.3 percent y-o-y increase to $2.2 billion in 2011-12, forecast to increase by 3.6 percent on average per annum between 2010-11 and 2015-16. Since 2011-12, Saudi Arabia's animal feed processors have been importing feed-quality wheat with up to 11 percent protein content, especially from Ukraine. The Saudi government decided in 2008 to terminate domestic wheat production by 2016. Domestic food wheat ending stock will decrease by 20 percent in MY 2012/-2013 due to reduced imports of food grade wheat in MY 201-2012 compared to imports in MY 2010-2011. Wheat is one of the most important staple grains in Saudi Arabia where most of it is consumed in the form of pita\flat bread and other types of European bread such as French baguettes, burger buns, and toast. Total Saudi food wheat consumption in MY 2012-2013 is forecasted to increase by two percent to about 2.9 million MT compared to the consumption level in MY 2010-2011. The consumption of feed quality wheat as animal feed has been increasing for the past two years and expected to reach about 700 thousand MT by the end of MY 2012-1213 which will increase total domestic wheat consumption by 21 percent compared to MY 2010-2011. GSFMO owns and operates 12 silo complexes in major cities around the country with a total combined storage capacity of 2.5 million MT. GSFMO plans to increase wheat storage capacity to 3.5 million MT by 2016. In January 2012, GSFMO signed a $149.3 million contracts to build a 120,000 MT wheat storage silos and a flour mill with a daily milling capacity of 600 MT at a Jizan Port. Both projects will be operational in 2014. Currently, GSFMO maintains ending stock that covers at least a six-month domestic consumption level. The GSFMO aims at gradually increasing the country's wheat reserves to cover one year of domestic consumption by 2016. Moreover, the Kingdom, the world's largest buyer of barley, has 1 million tons in stock, a trading source familiar with the matter said, enough to feed its camels and other livestock for about two months after importing a large volume. The stocks include cargoes of barley in 14 vessels that are currently unloading at various Red Sea Ports. "The above quantities mean that the supply chain is well secured," he added. The International Grains Council forecast in July that Saudi Arabia would import 7 million tons of barley in 2012-2013, down from 7.6 million in 2011. Saudis have traditionally preferred barley as a feed grain, which they find easier to store. A large proportion of the vessels carry French barley. France is expected to have a larger barley crop this year, while supplies from Ukraine and Germany are lower due to adverse weather, traders say. In one example, a large shipment of French feed barley arrived in the port of Jeddah on Aug. 15 from France's La Pallice port. It arrived aboard the "Aquintania G", which was contracted by the Saudi Grain and Fodder Holding company to transport several cargoes of feed barley from Europe, the trading source said. Traders said in July that at least half a million tons of French feed barley would be loaded for Saudi Arabia between July and August, in what was a record shipment from the Atlantic port of La Pallice. – SG/Reuters
