GASC sees higher prices as it buys 295,000 mt Russian wheat

Egypt’s state grains buying agency GASC returned to the market Tuesday, looking to take advantage of lower futures prices as it bought 295,000 mt of Russian wheat for delivery between February 20-28.

A combination of bearish WASDE and Wheat Seedings reports from the USDA on Friday, as well as lower European futures markets while the US was out of the market Monday, have made a return to top up supplies an attractive prospect on paper for the import agency.

However, a stronger rouble and continued uncertainty around Egypt’s wheat import policy pushed the average FOB offer heard in the market up $7.32/mt from last week’s tender to $200/mt FOB Russia, according to market sources.

A total of five cargoes were bought at an average $195.57/mt FOB Russia, up $4.89/mt since last week. Delivered prices came to $211.93/mt CFR Egypt, an increase of $4.07/mt.

Everything’s changing

This was set to be the first GASC tender to fall under the purview of Egypt’s National Food Safety Authority (NFSA), an agency designed to rationalise the muddle of decrees, rules and regulations which have previously led to confusion in the import market.

Given the recent track record of Egyptian authorities at reassuring the market, there have been some questions as to how the new agency will perform and what the future status of inspection and certification agency General Organization for Export and Import Control (GOEIC) might be.

The USDA’s local attaché at the embassy in Cairo said in December it was yet “unclear on how the role of GOEIC may change under the NFSA.”

Previous

At its previous tender on January 9, GASC bought 115,000 mt of Russian-origin wheat in a dramatic day which saw suppliers refuse to participate in concert.

Having been given guarantees by Egypt’s ministry of supply on potential demurrage costs, suppliers then returned to the market and agreed to sell to Egypt.

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

GASC has bought 4.97 million mt since the start of the 2017/18 marketing year on July 1, 77% of which has been supplied from Russia.

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.