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Thursday, 2 June 2022

We just bought a lot of wheat

State grain buyer GASC has purchased 465k tons of wheat for shipment in July and August in a fresh international tender, Reuters reported yesterday.

The breakdown: The order by the General Authority for Supply Commodities includes 240k tons of Romanian wheat, 175k tons of Russian wheat and 50k tons of Bulgarian wheat.

This is the biggest buy since the war in Ukraine broke out: GASC bought 350k tons in a tender in April, the only other held since the war started in February. Otherwise, we’ve been purchasing cargoes directly from suppliers, including a 61.5k shipment from India.

And one of the most expensive in years: Traders said GASC paid USD 480 per ton (including freight), up 41% from the last tender before the war. This is down slightly from the USD 490 price GASC paid in its last tender in April, which was the highest price in nearly six years. The Madbouly government in early March said rising wheat prices would cost it an additional EGP 15 bn this fiscal year.

Casting a wider net: This is GASC’s first tender since it reportedly loosened wheat quality rules in a bid to increase supplies. Egypt will allow wheat imports with a moisture content of up to 14% — up from 13.5% — for a year due to supply restrictions in the global market. The move is part of a wider strategy to ensure continued grain supply as Russia’s war in Ukraine stymies supply and pressures global prices. The two countries accounted for some 80% of our imported wheat supply before the conflict broke out.

The fate of that 500k-ton purchase from India remains unknown: Egypt is currently negotiating with India to get an exemption from its recent wheat export ban, which could jeopardize a 500k-ton purchase the government was close to signing off on.

Reserves are looking more robust: The state has so far bought 3 mn tons of local wheat, half of the 6 mn tons it is hoping to acquire this season. Egypt now has enough wheat to last until January 2023, Supply Minister Ali El Moselhy said last week. Remember, though — this may also include purchases rather than just fulfilled deliveries, according to commodity traders.

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