A worker collects wheat in the grain silos of Benha in Al Qalyubia governorate, Egypt, May 19, 2022. Portal/Mohamed Abd El Ghany/File Photo Acquire License Rights
CAIRO, Sept 4 (Portal) – Egypt’s state grain buyer bought about half a million tonnes of Russian wheat in a private deal, four traders told Portal. He managed to negotiate lower prices than in more traditional tenders.
Egypt, one of the world’s largest wheat importers, began switching to direct purchases instead of tenders last year after the war in Ukraine disrupted its purchases.
The General Authority for Supply Commodities (GASC) on Friday bought about 480,000 tons of Russian wheat from trading company Solaris at a price of about $270 a tonne on a cost and freight (C&F) basis, traders said.
GASC was not immediately available for comment.
Traders have told Portal the price may be below an unofficial floor set by the Russian government to control domestic wheat prices.
Other Russian wheat suppliers submitted offers on Friday at a freeboard price of $265 a tonne, assuming that was the established price floor, and a C&F price that exceeded $270 a tonne.
Traders told Portal that the price floor was not legally binding but that suppliers were expected to follow instructions from the Russian Agriculture Ministry.
There is uncertainty in the market about the level of the Russian minimum underprice.
Traders say there are different minimum prices for private sales and sales in public tenders, as well as different prices for sales in each month between September and December and discounts for lower protein wheat varieties.
In a tender last week, all Russian suppliers had submitted offers at a minimum price of US$270 per tonne on an FOB basis, with C&F prices ranging between US$286.25 and US$291 per tonne.
Traders told Portal at the time that this had hurt the competitiveness of Russian wheat as GASC bought cheaper Romanian and French wheat instead.
GASC had also privately purchased a load of Bulgarian wheat on Friday for $270 per tonne of C&F.
After the war in Ukraine disrupted the country’s wheat exports, Egypt relied primarily on relatively cheap Russian grain.
Last year, Egypt’s supply minister said that purchasing directly from suppliers allowed him to negotiate better prices in times of uncertainty.
The North African country is suffering from a foreign exchange crisis after the war in Ukraine caused a widespread shock to its economy and led to the country starting to defer wheat payments.
The government had recently signed a $500 million loan agreement with the Abu Dhabi Exports Office (ADEX) to buy imported wheat from UAE-based agribusiness Al Dahra.
Reporting by Sarah El Safty and Michael Hogan
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