Exclusive: Egypt buys nearly half a million tons of Russian wheat in a special deal

A worker collects wheat in Banha grain silos in Qalyubia Governorate, Egypt, May 19, 2022. REUTERS/Mohamed Abdel-Ghany/archive photo Obtaining licensing rights

CAIRO (Reuters) – The Egyptian state grain company bought about half a million metric tons of Russian wheat in a private deal, and succeeded in negotiating prices lower than those offered in more traditional tenders, four traders told Reuters.

Egypt, one of the world’s largest wheat importers, last year began shifting toward direct purchasing instead of tenders after the war in Ukraine disrupted its purchases.

The General Authority for Supply Commodities bought about 480,000 metric tons of Russian wheat from the Solaris trading company on Friday at a price of about $270 per ton based on cost and freight, traders said.

It was not possible to obtain an immediate comment from the General Authority for Supply Commodities.

Traders told Reuters that the price may be lower than the unofficial minimum set by the Russian government to control domestic wheat prices.

Other Russian wheat suppliers made offers on Friday at an FBO price of $265 per metric ton, believing it to be the minimum price quoted, and a C&C price of more than $270 per ton.

Traders told Reuters that the minimum price was not legally binding, but suppliers were expected to follow the instructions of the Russian Ministry of Agriculture.

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

Traders say there are different minimum prices for private sales and public tender sales, as well as different sales prices each month between September and December, and discounts on lower-protein wheat varieties.

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

Traders told Reuters at the time that this affected the competitiveness of Russian wheat, as the General Authority for Supply Commodities instead bought cheaper Romanian and French wheat.

The General Authority for Supply Commodities also privately purchased one shipment of Bulgarian wheat at $270 per ton including shipping costs on Friday.

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

Last year, the Egyptian Minister of Supply said that buying directly from suppliers enabled him to negotiate better prices in times of uncertainty.

The North African country is suffering from a foreign currency crisis after the Ukrainian war caused a widespread shock to its economy, prompting it to start postponing wheat payments.

The government recently signed a $500 million loan agreement with the Abu Dhabi Exports Office (ADEX) to purchase wheat imported from the UAE-based Al Dhahirah Agricultural Company.

(Reporting by Sarah Al-Safty and Michael Hogan)

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