Egypt overpaid for wheat against the background of a reduction in the number of sellers

At yesterday's tender Egypt purchased 175 thousand tons of Russian wheat for 212 $/ton with delivery. In General, within 3 months of the season 2017/18 Egypt has acquired more than 3 million tons of wheat.

In comparison with the previous tender 29.08.17 the purchase price increased by 11 $/t, or 5.2 percent, although during this period in Chicago wheat has risen by only 1.6% and in Paris – by 2.6%.

The main reason for the purchase by Egypt grain at above-market prices was the uncertainty with the policy of import of grain and the constant tightening of quality requirements. First, the normal content of ergot has been reduced to zero, then the rate of increased protein content, and recently claimed the absence of grain poppy seed.

Party of French and Romanian wheat, which are blocked by the quarantine service of Egypt in the port of Safaga allows to upload only after cleaning poppy seeds that will lead to significant losses for traders for simple vessels and additional port costs.

This situation has led to a gradual decrease in applications for participation in the tender. If 16-August 15 traders submitted 22 proposals at the end of August 11 traders provided 16 suggestions, yesterday the bidding took only 6 traders, who provided 11 of the proposals.

The higher price paid by GASC, reflected in part the additional freight charges. The freight. 16.25 $/t for shipping from Russia is the highest that has been paid on this route, starting in 2014.