December 14, 2023


Egypt acquires 600,000 tonnes of Black Sea wheat in latest purchase




Egypt's state grains buyer, the General Authority for Supply Commodities (GASC), was active in the global wheat market again last week, snapping up two parcels of Black Sea wheat totalling 600,000 tonnes by international tender, with payment on a 270-day letter of credit (LC).


On December 5, GASC announced it had purchased three 60,000 tonne cargoes for shipment between January 26 and February 4 after offers were received from Bulgarian, French, Romanian, Russian and Ukrainian exporters. The purchase included two Russian cargoes at US$255/tonne free on board plus freight of $23.25/tonne for a landed cost and freight price of $278.25/tonne. The third cargo was Ukrainian origin at $249.90/tonne FOB plus freight of $19.10/tonne for a C&F price of $269/tonne.


The tender received a total offer volume of more than two million tonnes across three shipment periods, with prices sought from each participant for payment by both sight LC and 270-day LC. The January 5-15 slot attracted nine offers totalling 515,000 tonnes, the cheapest being Russian origin at $250/tonne and $263/tonne for the respective payment options.


The second tender period was January 16-25, with 10 offers totaling 580,000 tonnes submitted with the lowest sight LC price of $250/tonne and the best 270-day LC price of $260/tonne. GASC only made purchases in the final period, which attracted 17 offers totaling one million tonnes with the sight LC price at a discount of around $5/tonne to accepted offers.


GASC then announced another tender with offers invited by noon December 7 for two shipping periods and the same two payment options. The first shipping period was January 10-20 with six offers received, five Russian and one French amounting to 345,000 tonnes. A total of 210,000 tonnes was booked from Russian exporter Grain Flower in four bottoms at $265/tonne FOB for payment on 270-day LC. Freight was reported at an average of $21.80/tonne for an average C&F price of $286.80/tonne.


The second shipping window of January 21-31 attracted seven offers, four Russian, two French and one Romanian, for a total of 415,000 tonnes. GASC went for more of the same, booking another 210,000 tonnes of Russian wheat in four cargoes from Grain Flower at the same value as the earlier shipment period.


Last week's international wheat tender activity was the first in some time for GASC after it had resorted to direct purchases via private negotiations over the past three months, with Russia dominating the dialogue. In early September, GASC reportedly purchased 480,000 tonnes of Russian wheat from trading firm Solaris at around $270/tonne C&F plus one cargo from Bulgaria at the same price.


In the second week of October, GASC booked another eight 60,000 tonnes of cargoes from OZK, also known as United Grain Co, a Russian state-backed trader at $265/tonne FOB. Then, late last month, another 480,000 tonne parcel was purchased, again from Russian exporters.


Egyptian wheat production in the 2023-24 marketing year (July-Jun) was forecast at 8.87 million tonnes, down 6.63% from 9.5 million tonnes in 2022-23 after the planted area dropped by 100,000 hectares to 1.35 million hectares. The fall in the planted area is reportedly being driven by an increase in the area allocated to Egyptian clover and sugar beets.


Wheat in Egypt is generally planted in November and harvested in April of the following year. The government's wheat-procurement season traditionally commences in mid-April and continues to mid-July. However, this year, it was extended to mid-August to give farmers more time to deliver their crop to government collection centres.


In the current calendar year, the government purchased almost 3.8 million tonnes from farmers, down from around 4.2 million tonnes in 2022.


According to the US Department of Agriculture's (USDA) Foreign Agricultural Service, Egyptian wheat imports are forecast at 12 million tonnes in the 2023-24 marketing year, up 6.9% from 11.22 million tonnes last season. The largest suppliers in 2022-23 were Russia with 8.1 million tonnes, the European Union with 1.8 million tonnes, Ukraine with 856,377 tonnes, and Australia with 172,015 tonnes.


In the eight months to the end of August this year, imports by GASC accounted for 50.5% of total wheat imports, with the private sector accounting for the balance.


In 2022-23, GASC imported 5.8 million tonnes of wheat to support the government's bread-subsidy programme.


- Grain Central

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