On Monday, Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), encountered the situation of having to pay higher prices than usual in an international wheat tender. This was due to the existence of minimum Russian export prices along with Egypt’s significant demand for wheat.
This tender marked Egypt’s first foray into the wheat market since its largest-ever tender in August, which was for 3.8 million tons. That tender was carried out under the directives of President Abdel Fattah al-Sisi in the wake of concerns regarding food security.
Traders reported that the lowest offer in the Monday tender for Ukrainian wheat was $263 per metric ton. Meanwhile, most offers for Russian wheat came in at $265 per ton.
According to Russia’s Grain Exporters Union, Russia has an unofficial minimum export price of $245 per ton FOB for November shipments and $250 for December. These prices are considerably higher than the broader market prices. Russia is implementing such measures to limit exports, aiming to curb domestic prices of flour and bread and also to sell its exports at a more favorable price.
Moreover, Russian authorities are contemplating steps to restrict the participation of foreign companies in Russian wheat sales, thereby tightening their control over wheat exports.
Market analysts believe that these circumstances could potentially create opportunities for alternative sources of wheat, such as Ukrainian or European wheat, to secure deals with Egypt.
As one German trader stated, “There has been considerable debate in the market about whether Russian traders will follow the minimum export price or offer more realistic market prices.” He further added, “The Russian minimum price will naturally give other origins a better chance of winning Egyptian sales.”
Egypt’s Return to Wheat Market Brings Higher Prices Amid Russian Export Policies