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Thursday, 17 June 2021

Wheat suppliers allowed to submit shipment bids to GASC

State grain buyer GASC is allowing wheat suppliers to submit bids to ship the grain under a new amendment to the tender book for international wheat purchases, according to a document seen by Reuters.

In detail: All suppliers can now bid directly to GASC, and can submit their guarantees to the government body regulating the import of crops. Previously only traders with freight carriers registered with the Egyptian Company for Maritime Transport were permitted to present shipping offers. The decision, taken by the Supply Ministry, will be effective as of GASC’s next tender.

What’s the rationale? The move is designed to lower freight rates, which have climbed in recent weeks as oil prices have increased, a source at the Egyptian Holding Company for Silos and Storage told Enterprise. On Tuesday GASC called off an international wheat tender in which it received only three offers, reportedly due to expensive freight rates.

But this may not solve the problem: "[This change] doesn't solve their immediate problem which is high freight rates,” one Egyptian trader said. The fluctuation of oil prices will in large part determine the cost of shipping. “By the next tender oil could be up which will make [freight] more expensive, or by chance it could be down and freight will be lower," said another trader.

That’s not to say the amendment won’t make some impact: The change should address the lack of available vessels. “I think it will give more suppliers a better chance and will increase overall freight competition, which is ultimately for the good of Egypt,” another trader said.

The new amendment is unlikely to benefit wheat sellers, who may be unwilling to provide ships as well, but large trading houses with freight departments may benefit, a European trader said.

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