Egypt bets big with historic 3.8 million metric ton wheat tender

Cairo | Reuters—Egypt has launched a massive tender to import 3.8 million metric tons of wheat, its largest ever tender according to traders, as the country seeks to take advantage of a slump in global wheat prices to 4-year lows.

If Egypt is able to buy wheat at knock-down prices, the lower import bill could help in efforts to keep the economy afloat.

The country has needed the support of the International Monetary Fund and friendly Gulf countries who have injected billions of dollars in loans and investments in 2024 alone.

“My colleagues (at the government) are seizing this opportunity to buy what we need amid the current situation in the global market,” Finance Minister Ahmed Kouchouk told reporters on Tuesday, adding that not all repercussions of the global sell-off wave were negative.

The tender marked a change in the purchasing strategy of state grains buyer, the General Authority for Supply Commodities (GASC), which typically is for one or two months rather than for the October to April shipment period covered in this tender.

Egypt has been one of the world’s largest wheat importers, mainly to provide subsidized bread for tens of millions of its people. GASC alone imports some 5.5 million metric tons of wheat annually for bread subsidies.

Egypt typically imports most of its grain from Russia, which made up nearly 70 per cent of all its wheat imports in 2023.

Traders expect GASC to buy from Russia and other Black Sea origins in the upcoming tender.

“This is a very strange tender,” said one trader. “We usually submit bids for shipping a month or two in advance. It would be very difficult to submit a freight offer six or seven months in advance.”

Some traders were sceptical about Egypt’s ability to fulfil its ambition.

“I doubt if they will be able to get the full volume,” said another trader. He said the 270-day payment term was off-putting.

A third trader said trading houses will want the business and will just add the banking costs of the 270-day payment delay to their price offers.

GASC said it aims to maintain a wheat reserve sufficient to meet nine months of demand, with reserves in July standing at 6.9 months.

“It appears that Egypt wants to get big supplies in storage or at least in its books. This could be due both to Egypt’s financial problems or the threat of greater war in the Middle East,” a European trader told Reuters.

“They could shoot themselves in the foot by buying in advance but then having to regret if prices fall later.”

Shortly after GASC’s announcement, European wheat futures rose on Tuesday.

—Reporting for Reuters by Sarah El Safty, Nadine Awadalla, Mohamed Ezz and Michael Hogan