Egypt is not buying wheat during informal negotiations — traders

Egypt’s state grain buyer has yet to purchase wheat in informal talks with suppliers that began earlier this week after buying a small volume in a tender for 3.8 million metric tons, traders in Europe and the Middle East said on Thursday.

Traders told Reuters that the General Authority for the Supply of Commodities (GASC) was weighing the prices sought in informal talks and was still considering whether to buy through a traditional tender process or directly.

Reuters reported earlier that the GASC was in talks to buy up to 1.8 million tons of wheat from sellers including Russia at a reported ex-board price of about $248 per ton with payment through 270-day letters of credit.

Egypt bought just 280,000 tons of wheat in an international tender on Monday, falling short of its target of 3.8 million tons, as traders said a long delay in payment had driven up prices.

“I don’t think the actual negotiations are going on,” said one European trader. “They may have been engaged in price checks. They were interested in Russian supplies, and Russian prices have recently been lower in private deals than in state tenders.”

A second source said the offer has already been made and the suppliers are waiting for a response from GASC, which is considering a more open tender procurement.

GASC did not respond to requests for official comment.

In 2022, under former Minister of Supply Ali Moseli and former GASC deputy chairman Ahmed Yousef, Egypt switched to direct wheat procurement instead of tendering, as Moseli believed it attracted more competitive prices at the time.

Under the new minister and vice-chairman, GASC did not make any direct purchases.

Egypt, one of the world’s largest wheat importers, has been struggling with high inflation for the past two years and needed support from the International Monetary Fund and friendly Gulf countries to overcome the currency crisis.

The country relies heavily on wheat imports to provide subsidized bread for tens of millions of its citizens and has recently adopted austerity measures to cut costs, including raising decades-old subsidized bread prices earlier this year.

More recently, its quest to secure payment deferrals backfired in its attempt to secure large supplies of wheat at favorable prices in this week’s tender, resulting in a much smaller and more expensive purchase than anticipated.

Tags: wheat, Egypt, tender