Egypt, one of the world’s largest importers of wheat, has purchased approximately 500,000 metric tons of Russian wheat through a private transaction. This move allowed Egypt to secure lower prices compared to traditional tenders.
The General Authority for Supply Commodities (GASC) concluded the deal with trading firm Solaris at a price of around $270 per ton on a cost and freight basis (C&F), according to four traders. It’s worth noting that this price may be below an unofficial floor set by the Russian government to control domestic wheat prices.
Last year, Egypt began shifting from tenders to direct purchases due to disruptions caused by the war in Ukraine. Russian wheat suppliers participating in the transaction believed that the price floor was set at $265 per metric ton on a free-on-board (FOB) basis, with a C&F price exceeding $270 per ton.
The level of Russia’s minimum floor price remains unclear in the market. Traders have indicated that different minimum prices apply to private sales, public tenders, sales in various months between September and December, and discounts for lower-protein wheat grades.
In a recent tender, all Russian suppliers submitted bids with a price floor of $270 per metric ton on an FOB basis, while C&F prices ranged from $286.25 to $291 per metric ton. This pricing structure had previously impacted the competitiveness of Russian wheat, prompting GASC to purchase cheaper Romanian and French wheat in a separate transaction.
Egypt’s shift to direct purchases allowed the country to negotiate better prices during times of uncertainty. The move comes as Egypt grapples with a foreign currency shortage following economic shocks caused by the war in Ukraine. To address this, the Egyptian government recently signed a $500 million loan agreement with the Abu Dhabi Exports Office (ADEX) to purchase imported wheat from UAE-based agribusiness Al Dahra.
GASC has traditionally been one of the largest wheat importers in the world, and its procurement decisions have a significant impact on global wheat markets.
