Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), has successfully purchased approximately 480,000 metric tons of Russian wheat in a private deal, according to four traders who spoke with Reuters. The deal allowed Egypt to negotiate lower prices compared to the more traditional tenders. Egypt, one of the world’s largest importers of wheat, shifted towards direct purchases last year after the war in Ukraine disrupted its buying patterns.
The traders revealed that GASC bought the Russian wheat from trading firm Solaris at a price of about $270 per ton on a cost and freight basis (C&F). Notably, the price could potentially be below an unofficial floor set by Russia’s government aimed at controlling domestic wheat prices. GASC was not immediately available for comment regarding the purchase.
Traders informed Reuters that other Russian wheat suppliers submitted offers on Friday at a free-on-board price of $265 per metric ton, believing it to be the set price floor, with a C&F price exceeding $270 per ton. Although the price floor is not legally binding, suppliers are expected to adhere to instructions from Russia’s agriculture ministry.
There appears to be a lack of clarity in the market regarding the level of the Russian minimum floor price. Traders have reported different minimum prices for private sales and sales in public tenders, as well as varying prices for sales in each month between September and December, and discounts for lower protein wheat grades.
In a recent tender, all Russian suppliers submitted bids at a price floor of $270 per metric ton on a free-on-board basis, with C&F prices ranging between $286.25 and $291 per metric ton. This hindered the competitiveness of Russian wheat, leading GASC to purchase cheaper Romanian and French wheat instead. Additionally, GASC privately bought one cargo of Bulgarian wheat at $270 per ton C&F.
Egypt had been heavily reliant on relatively inexpensive Russian grain after the war in Ukraine disrupted the country’s wheat exports. Last year, Egypt’s supply minister stated that purchasing directly from suppliers enabled the country to negotiate better prices during uncertain times.
Egypt’s economy has been facing a foreign currency crisis since the Ukraine war significantly impacted it. As a result, the country started deferring wheat payments. To address this, the government secured a $500 million loan agreement with the Abu Dhabi Exports Office (ADEX) to purchase imported wheat from UAE-based agribusiness Al Dahra.
The news article was reported by Sarah El Safty and Michael Hogan and adheres to Thomson Reuters’ Trust Principles.