EGYPT – The General Authority for Supply Commodities (GASC), the state’s grain buyer is set to buy 480,000 metric tons of Russian wheat in a private deal with Russia’s state grains trader United Grain Company (OZK).
According to Zawya, eight wheat cargoes with the consignment are expected to be shipped in November and December.
Traders reported that the purchase, which represents roughly 4% of Egypt’s annual imports is estimated at about US$265 a ton free-on-board (FOB) with payment in 270-day letters of credit.
Zawya, citing Bloomberg stated that it is unclear if this price point is below an unofficial price floor set by the Russian government to dampen domestic flour prices.
Traders said there are different minimum prices for private sales and sales in public tenders, as well as different prices for sales for different months and protein wheat grades.
One trader said that the price floor for November was thought to be set at US$270 per ton.
“It is really hard to guess if the minimum price is really being imposed strictly to reduce exports,” the trader added.
According to sources, since the upheaval caused by Russia’s invasion of Ukraine last year, leading to disruptions in global wheat markets, Egypt has shifted towards direct purchases, rather than tenders, to secure more favorable prices.
Recent reports by Bloomberg indicated that Egypt was planning to procure nearly 500,000 metric tons of wheat from France and Bulgaria after a deal with Russia was obstructed by the Russian government due to pricing objections.
However, the two nations later came into talks as Egypt wanted to acquire 1 million metric tons of wheat from the Russian government.
The traders, however, expressed concern that Russian export flows may be reduced but are likely to be still very big.
The unofficial price floor has proven a hindrance for both GASC and Russian wheat suppliers who have upped sales of relatively cheap Russian grain to Egypt since Russia invaded Ukraine in February 2022.
Zawya stated that the United Grain Company (OZK) and the GASC declined to respond to Bloomberg on the situation.