Futures dip brings GASC back to the market for March wheat

Egypt’s state grains agency GASC returned to the market Friday, tendering for wheat for delivery from March 5-15, as futures prices fell in the US and Europe for a second day in a row.

Chicago front month futures have fallen by around 3% over the past two days, with the Euronext equivalent contract down approximately 2.5%, giving Egyptian authorities the opportunity to take advantage of lower prices when weather fears and the weaker dollar has seen the cash market rising. 

Having received nine offers from the market from Russia and Romania, GASC bought ­three cargoes totalling 180,000 mt at an average $219.45/mt CFR Egypt.

After a string of costly delays and misunderstandings, Egyptian authorities have now loosened quality restrictions, clarified guidelines as to who will bear the cost of delays, and stipulated the penalty for cargoes that fail to meet phytosanitary requirements.

Less stringent protein requirements were interpreted in the market as a way of attracting lower offer prices.

This plan does not appear to have worked, however, with the average origin price $203.97/mt FOB Russia, $8.40 higher than at its previous tender on January 16.

GASC has now bought 5.03 million mt since the start of the 2017/18 marketing year on July 1, 80% of which has been supplied from Russia.

Egypt, the world’s biggest wheat importer, regularly buys more than 11 million mt a year.