Egypt buys almost half-a-million tonnes of discounted Russian wheat

Cairo — Egypt’s state grains buyer bought about a half-a-million metric tonnes of Russian wheat in a private deal, four traders said, succeeding in negotiating lower prices than those offered in traditional tenders.

One of the world’s biggest importers of wheat, Egypt last year started shifting towards direct purchases instead of tenders after the war in Ukraine disrupted its buying.

The General Authority for Supply Commodities (GASC) bought about 480,000 metric tonnes of Russian wheat from trading firm Solaris on Friday, at about $270 a tonne on a cost and freight basis (C&F), the traders said.

GASC was not immediately available for comment.

Traders have said the price could possibly be below an unofficial floor set by Russia’s government to control domestic wheat prices.

Other Russian wheat suppliers submitted offers on Friday at a free-on-board price of $265 per metric tonne, believing it to be the set price floor, and a C&F price that exceeded $270 per tonne.

Traders said the price floor is not legally binding but that suppliers are expected to follow instructions from Russia’s agriculture ministry.

There is a lack of clarity in the market about the level of the Russian minimum floor price.

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 grades.

In a tender last week, all Russian suppliers had submitted bids at a price floor set at $270 per metric tonne on an FOB basis, with C&F prices ranging between $286.25 and $291 per metric tonne.

Traders said at the time that this had weighed on Russian wheat’s competitiveness, with GASC buying cheaper Romanian and French wheat instead.

GASC had also privately bought one cargo of Bulgarian wheat at $270 per tonne C&F on Friday.

After the war in Ukraine disrupted the country’s wheat exports, Egypt had been mainly relying on the relatively cheap Russian grain.

Last year Egypt’s supply minister said purchasing directly from suppliers enabled it to negotiate better prices during uncertainty.

The North African country has been suffering from a foreign currency crunch after the Ukraine war delivered a broad shock to its economy, causing it to start deferring wheat payments.

The government recently signed a $500m loan agreement with the Abu Dhabi Exports Office (Adex) to buy imported wheat from UAE-based agribusiness Al Dahra.

Reuters