EGYPT — The General Authority for Supply Commodities (GASC), Egypt’s state grains buyer, has announced a tender for 3.8 million metric tons of wheat, marking the largest ever wheat procurement according to traders.
The tender specifies shipment periods from the 1st to the 15th and/or the 16th to the 30th of each month, starting in October and ending in April 2025. The February shipment date is set for the 16th to the 28th.
The wheat will be purchased on a free-on-board basis using 270-day letters of credit. Traders are required to submit bids for at least three months’ shipments by the deadline of August 12.
“This is a very strange tender. “We usually submit bids for shipping a month or two in advance. Submitting a freight offer six or seven months in advance would be very difficult,” a trader commented.
Egypt, one of the world’s largest wheat importers, relies heavily on imports to provide subsidized bread for millions of its citizens. GASC alone imports approximately 5.5 million metric tons of wheat annually.
This tender marks a significant shift in GASC’s purchasing strategy. Given the 270-day payment terms, traders expressed concerns about Egypt’s ability to secure the full volume.
“I doubt if they will be able to get the full volume,” said another trader.
However, some believe that trading houses will factor in the banking costs of the delayed payment into their price offers.
Egypt’s Finance Minister Ahmed Kouchouk, speaking at a press conference on August 6, acknowledged the tender’s timing amid a global commodity price decline.
“My colleagues (at the government) are seizing this opportunity to buy what we need amid the current situation in the global market,” Kouchouk said.
Despite the economic challenges and reliance on support from the International Monetary Fund and Gulf countries, GASC aims to maintain a wheat reserve sufficient to meet nine months of demand. As of July, Egypt’s strategic reserves were estimated to last for 6.9 months.
The announcement of this record-breaking tender has already impacted the market, with European wheat futures rising shortly after the news broke.
“This could be due both to Egypt’s financial problems or the threat of greater war in the Middle East “They could shoot themselves in the foot by buying in advance but then having to regret it if prices fall later,” a European trader speculated.
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