CAIRO: Egypt’s state grains buyer, the General Authority for Supply Commodities, announced on Tuesday a massive tender for 3.8 million metric tons of wheat to cover imports between October 2024 and April 2025, its largest ever according to traders.
Egypt has been one of the world’s largest wheat importers, mainly to provide subsidised bread for tens of millions of its people. GASC alone imports some 5.5 million metric tons of wheat annually for bread subsidies.
GASC is seeking the wheat for shipment periods spanning 1-15 and/or 16-30 of each month starting in October until April, with the shipment date in February to be 16-28. Egypt is seeking the cargoes on a free-on-board basis and will purchase using 270-day letters of credit.
GASC is requesting that traders submit bids for at least three months’ shipments. The deadline for offers is Aug 12.
“This is a very strange tender,” said one trader.
“We usually submit bids for shipping a month or two in advance. It would be very difficult to submit a freight offer six or seven months in advance,” he added.
Traders told Reuters that the latest tender is an enormous change to GASC’s whole purchasing strategy and could be a win-all or lose-all situation for the North African country, which is working to keep its economy afloat with the support of the International Monetary Fund and friendly Gulf countries who have injected billions of dollars in loans and investments in 2024 alone.
Speaking at a press conference on Tuesday, Egypt’s Finance Minister Ahmed Kouchouk said that not all repercussions of the global sell-off wave are negative, as commodity prices are now at an almost four-year low.
Shortly after GASC’s announcement, European wheat futures rose on Tuesday.
“My colleagues (at the government) are seizing this opportunity to buy what we need amid the current situation in the global market,” Kouchouk said.
However, traders are skeptical about Egypt’s ability to fulfill its ambition.
“I doubt if they will be able to get the full volume,” said another trader. He said the 270-day payment is very off-putting.
However, a third trader said trading houses will want the business and will just add the banking costs of the 270-day payment delay to their price offers.
GASC said it aims to maintain a wheat reserve sufficient to meet nine months of demand.
As of July, wheat Egypt’s strategic reserves of wheat were estimated to be sufficient for 6.9 months. “It appears that Egypt wants to get big supplies in storage or at least in its books. This could be due both to Egypt’s financial problems or the threat of greater war in the Middle East,” a European trader told Reuters.
“They could shoot themselves in the foot by buying in advance but then having to regret if prices fall later.”
