Egypt will purchase European wheat after canceling a major agreement with the Russian Federation

The Russian authorities blocked an agreement to supply 480,000 tons of wheat to Egypt, after which he agreed to purchase the same amount of wheat from France and Bulgaria.

According to sources who asked not to be named, the Russian authorities did not like the price of the deal. For the second time in recent months, Egypt's purchase of Russian wheat has been canceled, as the Russian Federation is trying to unofficially keep the lower limit of export prices at $270/t FOB.

At the beginning of September, the main supply department of Egypt agreed to buy 480,000 tons of Russian wheat at a price of $270/t, including freight, which was lower than the price approved by the Russian authorities for exporters in direct negotiations outside the tender. Egypt later said grain trader Solaris would be allowed to supply grain of any origin. So far, Solaris and MSG of the Russian Federation have not commented on the situation.

Two consecutive record wheat harvests made the Russian Federation dominant and the main price maker on the world market. However, overcrowded grain ports and oversupply are putting pressure on prices, so authorities set a floor price to support the market. But the application of such a price limit seems inconsistent.

At yesterday's GASC tender in Egypt, all Russian offers were again priced at $270/t FOB, while Romanian wheat (which eventually won) was offered 5.5% cheaper at $255.91/t FOB.

Most likely, in the near future, the Russian Federation will decide to limit its wheat exports so that world prices rise to the level of $270-280/t FOB and higher, taking advantage of the status of the main world exporter, which in 2023/24 MR will supply the world market with 50 million tons of wheat, out of the projected 207 million tons of trade