Egyptian GASC purchased expensive Russian wheat, but refused cheap Ukrainian grain

On January 17, the Egyptian GASC held the second international tender for the purchase of wheat in 2024, where it purchased a large batch of Russian wheat at the same price as at the auction on January 9, despite a significant decrease in the price of the offer of Ukrainian wheat from Nibulon.

The following proposals were submitted to the tender:

• 10 (15 at previous auctions) batches of Russian wheat at a price of $260 (265)/t FOB with payment in 180 days and $265 (270)/t FOB with payment in 270 days,
• 3 (2) batches of French wheat at a price of $259.68-262 (272) $/t FOB with payment 180 days and $267-271.5 (277) $/t FOB with payment 270 days,
• 1 batch (the cheapest of the offered) of Ukrainian wheat from the Nibulon company at a price of $229.75 (261) $/t FOB with payment in 180 days and $244.75 (266) $/t FOB with payment in 270 days.

The prices of French and Ukrainian wheat offers fell sharply, in particular, the price of Ukrainian wheat was $35.2/t lower than the price of its purchase at the previous auction on January 9, and French wheat was $12.32/t lower than the price of the best French offer at previous auctions. Romanian wheat was not offered at all, while 3 applications at competitive prices were submitted for the January 9 tender. All offers of Russian wheat had the same price (as in all the last 6 months), $5/ton lower than at the previous auction.

As a result, GASC purchased 360,000 tons of food wheat for delivery March 15-30 at an average price of $285.48/t C&F and payment 270 days after the opening of the letter of credit, including:

• 300,000 tons of Russian wheat from the companies ME Solaris Commodities, Grain Flower, Aston Agro-Industrial SA and Olam at an average price of $265/t FOB (4 shipments from the Caucasus and 1 from Novorossiysk) + $20.67/t freight = 285, $67/t C&F,
• 60 thousand tons of French wheat from Viterra at a price of $262.5/t FOB or $284.5/t CFR + $22/t freight = $284.5/t C&F.

We will remind that on January 9, GASC purchased 420,000 tons of food (mostly Russian) wheat with delivery from February 29 to March 11 at an average price of $285.05/t C&F and payment 270 days after the opening of the letter of credit, and on December 19 - 480,000 tons of Russian wheat for delivery in February at a price of $265/t FOB + $22.4/t freight = $287.4/t C&F with 270 days payment, while at the auction on December 5 the purchase price was $275.17/t C&F.

According to Reuters, in 2023, Egypt increased wheat imports by 14.7% from 9.48 to 10.88 million tons in 2023 compared to 2022, in particular the state GASC - by 26% to 5.6 million tons, and other private importers - by 1.3% to 5.12 million tons. At the same time, wheat supplies from the Russian Federation (which make up 69.5% of Egyptian imports) increased by 39.5% to 7.56 million tons, and from Ukraine - from 845.6 thousand tons to 1.28 million tons, which accounted for 11.8% of total imports.