GASC books 115,000 mt of Russian wheat following supplier revolt

Egypt’s state grain purchaser GASC booked 115,000 mt of wheat from Russian suppliers for delivery February 11-20 on Tuesday, but only after initially receiving no offers due to concerns over Egypt’s robust approach to inspections.

GASC had been seeking optional origin wheat, but market sources told Agricensus the number of participants dwindled in the face of fresh concerns over who pays any demurrage costs resulting from inspecting or sieving the cargo.

After the initial delay, seven sellers of Russian wheat agreed to return to the market and make offers having received sufficient guarantee from GASC.

Offers ranged from $192-$201.95/mt FOB with an additional cargo offered at $204.75/mt FOB Romania.

GASC booked 115,000 mt of Russian-origin wheat from AOS at $207.60-$208.10/mt CFR – 55,000mt at $192/mt FOB Tuapse and 60,000 mt at $193.30/mt FOB Novorossiysk.

At its previous tender on December 27, GASC purchased 180,000 mt of Russian-origin wheat for delivery from February 1-10, paying an average price of $208.05/mt.

Russian sellers have sold over 3.5 million mt of wheat to Egypt at tender this marketing year.

Unfinished business

Egypt, the world’s largest wheat buyer, rattled international markets when inspectors rejected a cargo of French wheat sold by Bunge due to the presence of the fungus ergot.

A series of cargoes from Romania, Russia, and the US were subsequently held up for inspection, causing costly delays to traders.

In the immediate aftermath of the cargo rejections, GASC found itself in a position where it received no interest in its wheat tenders.

It had typically received more than 20 offers from the trade in the year before phytosanitary concerns started to be raised.

When sellers eventually returned to the market, a hefty risk premium was applied to compensate traders for potential losses caused by demurrage or rejected cargoes.

While this premium had since largely subsided, a drawn-out back-and-forth between various branches of the government ensued over the next two years, with little clarity on the legal status of cargoes coming into the country.

A late 2017 ruling had been designed to put an end to the uncertainty, although it appears this has only temporarily calmed the market’s concerns.

Egypt imports over 11 million mt of wheat a year since 2013. GASC has bought 4.59 million mt of wheat since the start of the marketing year on July 1.

This article was updated on January 17 2018. It incorrectly stated Egyptian wheat imports are over 20 million mt a year, this was the total grain import figure. The correct number is over 11 million mt.