Egypt’s General Authority for Supply Commodities (GASC) has successfully acquired approximately 500,000 metric tons of Russian wheat through a private transaction, according to information shared by four traders with Reuters on Monday. This move comes after GASC was able to negotiate lower prices compared to those typically offered in traditional tenders.
Egypt, one of the world’s largest importers of wheat, began shifting toward direct purchases instead of tenders last year due to disruptions caused by the conflict in Ukraine involving Russia, one of its primary wheat suppliers.
Traders informed Reuters that GASC purchased approximately 480,000 metric tons of Russian wheat from the trading firm Solaris on Friday. The cost of this acquisition was around $270 per ton on a cost and freight (C&F) basis. Traders also suggested that this price may potentially be below an unofficial floor price established by the Russian government to manage domestic wheat prices.
Last week, other Russian wheat suppliers submitted their offers with a free-on-board (FOB) price of $265 per metric ton, believing it to be the set price floor. Their C&F prices exceeded $270 per ton. It was noted that while the price floor was not legally binding, suppliers were expected to adhere to guidance from Russia’s agriculture ministry.
The market currently lacks clarity regarding the level of the Russian minimum floor price. Traders have indicated that there are different minimum prices for private sales and public tenders, varying prices for each month between September and December, and discounts for lower protein wheat grades.
In a recent tender, all Russian suppliers had presented their bids with a price floor set at $270 per metric ton on an FOB basis, with C&F prices ranging between $286.25 and $291 per metric ton. This pricing structure had impacted the competitiveness of Russian wheat, leading GASC to procure cheaper wheat from other sources like Romania and France.
Additionally, GASC privately acquired a cargo of Bulgarian wheat at $270 per ton C&F on Friday, further diversifying its wheat sources.
Egypt’s decision to engage in direct purchases from suppliers has enabled the country to negotiate better prices during times of uncertainty. The government’s move towards direct purchases aligns with its strategy to secure essential food commodities while optimizing costs and supply reliability.
