State grain buyer GASC has secured 120k tons of Russian wheat directly from suppliers for delivery in November at USD 340 per ton, traders told Agricensus. The buy marks GASC’s second direct purchase from Russia in as many weeks, as the state appears to pivot away from public tenders after war in Ukraine stirred up volatility in the global wheat markets.

Have tenders been put out to pasture? The authority has so far secured 2.85 mn tons of wheat on the international markets for the current fiscal year — with some 55% purchased through direct tenders, according to Agricensus data. GASC had historically procured its wheat through international tenders, but cabinet in May gave the authority the go-ahead to purchase wheat directly as it looked to diversify supply amid a tight market. We’ve gone three months now without a successful tender, after the last tender in mid-July was canceled due to higher-than-expected prices.

Private purchases offer upsides: In volatile times for the global wheat markets, private purchases offer “better prices and conditions compared to when there are global tenders,” Supply Minister Ali El Moselhy told Reuters at a press conference last week. Direct purchases mean the government can be lighter on its feet, buying in smaller quantities when the price is right and without disclosing what it paid, traders and consultants told the newswire. “Any time prices are falling suppliers can offer that lower price to GASC, without having to wait for the tender day,” one trader was cited as saying.

The grain markets are cooling: This latest purchase was some 7.6% cheaper per ton than our most recent direct purchase toward the end of August, when GASC bought 240k tons of Russian wheat — and 23% cheaper than our canceled July tender. After spiking as high as USD 429 per ton in May on the back of the war in Ukraine, Paris wheat futures for December are now trading at USD 318 a ton. The drop is in part thanks to a UN-negotiated amnesty for grain cargoes amid Moscow’s blockade of Ukrainian ports.

On the domestic front: The government procured around 4.2 mn tons of wheat from local farmers during this year’s harvest, which wrapped up in August, missing the ambitious 6 mn-ton target set after spiking food prices forced the state to increase its reliance on local production.

RICE PRODUCTION TO FALL THIS YEAR-

Local rice production is expected to fall to 4.5 mn tons this season from 4.8 mn tons last year amid planting restrictions aimed at conserving water, according to Bloomberg Asharq.