CAIRO - Egypt's single biggest ever wheat tender attracted more than 100 offers albeit at a premium, traders said, as the struggling economy looks to lock in cheaper wheat prices.
The country, one of the world's largest wheat importers, launched the 3.8 million metric ton tender last week in a change of strategy that was seen as capitalising on a recent slump in global wheat prices to four-year lows.
Around 102 offers were submitted by 15 suppliers in the tender, which is seeking the wheat for the October to April shipment period. Only a few offers were submitted for post-December shipment, traders said.
Ukrainian wheat was offered lowest at $244 per metric ton at the tender, a price the traders said was at a premium due to delayed payment terms and long shipping periods.
Egypt's state grains buyer, the General Authority for Supply Commodities (GASC), does not give out pricing information.
"The two main factors are the long 270-day letters of credit and the risk factors. Future conditions are not guaranteed whether it's the geopolitical circumstances or maybe market volatility," one local trader said of the high prices.
A European trader said it could be possible for GASC to buy the full volume it was seeking, adding that there was a decent number of offers both for the wheat and the ocean shipping.
"But the delayed payment terms look like they'll increase the cost of the purchase despite prices falling and Russia reducing its export taxes," said the trader.
Egypt has been grappling with high inflation in the past two years and has needed the support of the International Monetary Fund and friendly Gulf countries to tackle a foreign currency crunch.
The North African country has undertaken austerity measures in order to cut spending, including raising the decade-old price of subsidized bread earlier this year.
It relies heavily on wheat imports to provide subsidised bread for tens of millions of its citizens. GASC alone imports around 5.5 million tons of wheat annually to support the country's bread subsidy programme.
For the fiscal year 2024/25, GASC plans to secure a total of 8.25 million metric tons of wheat for bread subsidies, sourced from both the local harvest and imports, at an estimated cost of nearly 96 billion Egyptian pounds ($1.95 billion), according to the state budget.
The government has already procured 3.6 million metric tons in the local harvest this year.
"The 3.8 million metric tons in the tender represent the shortfall GASC anticipates for bread production until April, when the next local harvest begins," said Nasr.
The lowest offer was presented by Olam for 60,000 metric tons for an Oct. 1-15 shipping period. One offer by Al Dahra was rejected due to number of bid bonds, traders said.
