Egypt announced the largest wheat tender in history. Why?

Egipt ogłosił największy w historii przetarg na pszenicę. Dlaczego?

– Egypt announces a tender for as many as 3.8 million tons of wheat. Delivery period 10/2024-04/2025. This is very unusual for a country that has so far mainly submitted tenders for amounts up to 700,000 tonnes. Egypt apparently believes that prices have dropped and now is the time to buy. Seasonal price pressure in the US is also coming to an end. The latest estimates put the French wheat harvest at just 25.2 million tonnes. This would be the worst harvest in 41 years. Stock markets are picking up again. It will be interesting to see whether this is just a reflection or a lasting trend – Przemysław Błażejewski from BST Brokers analyzes on X.

Wheat tender

We remind you that Egypt is one of the largest importers of wheat in the world. The state-owned General Authority for Supplies Commodities (GASC) alone imports about 5.5 million tons of wheat annually as part of bread subsidies. And according to Arab News, GASC is looking for wheat for delivery periods spanning the 1st-15th and/or 16th-30th of each month, starting from October to April. It is now asking traders to bid for supplies lasting at least three months. The deadline is August 12.

– This is a very strange tender – said one of the traders quoted by the website. Why? – We usually place shipping offers a month or two in advance. It would be very difficult to submit a freight offer six or seven months in advance, he adds.

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Change in Egypt's purchasing strategy

This new historic tender therefore changes Egypt's purchasing policy. How do salespeople explain it? They commented to Reuters and emphasized that the latest tender represents a huge change in GASC's entire procurement strategy and may be a win-win or lose-lose situation.

They recall that, with the support of the International Monetary Fund, the country is trying to maintain its economy despite the turmoil in the region.

According to Egypt's Finance Minister, commodity prices are currently the lowest in almost four years, which is why they decided to make such a move. It should be noted that shortly after the announcement of this great tender, there were increases in wheat contracts.

Will Egypt buy so much grain?

Traders are skeptical about this. They believe that Egypt will not be able to obtain such a large purchase volume. Why? The 270-day payment for the raw material is supposed to be a deterrent.

Another entrepreneur quoted by Arab News said that traders will nevertheless take the risk and simply add bank costs resulting from the 270-day payment delay to their price offers.