Egypt, one of the major wheat importers in the world, started moving away from tenders and toward direct purchases last year after the Ukraine War delayed its purchasing.
On Friday, according to the traders, the General Authority for Supply Commodities (GASC) purchased 480,000 metric tons of Russian wheat from the trading company Solaris for roughly $270 per ton on a cost and freight (C&F) basis.
GASC could not be reached for comment right away.
The price may go below an unofficial floor set by the Russian government to manage domestic wheat prices, traders have told Reuters.
Other Russian wheat producers made offers on Friday, believing that the set price floor was $265 per metric ton for free-on-board and $270 or more for C&F.
Traders told Reuters that although the price floor was not enforceable, suppliers were still required to abide by orders from Russia’s agriculture ministry.
The Russian minimum floor price’s level is not well understood in the market.
According to traders, there are differing minimum pricing for sales made privately vs those made through public tenders. There are also varying prices for sales made between September and December, as well as reductions for lower protein wheat types.
All Russian suppliers filed bids in a tender last week with a price floor of $270 per metric ton FOB and C&F prices ranging from $286.25 to $291 per metric ton.
At the time, traders told Reuters that this had hurt Russian wheat’s ability to compete, leading GASC to purchase less expensive French and Romanian wheat.
Additionally, GASC had privately purchased one cargo of Bulgarian wheat on Friday for $270 per ton C&F.
Egypt has been mostly reliant on the reasonably priced Russian grain after the war in Ukraine hindered the nation’s wheat shipments.
According to Egypt’s supply minister from a year ago, buying directly from suppliers allowed the country to bargain for lower costs during tumultuous times.
The Ukraine crisis dealt the North African nation a severe blow to its economy, leading it to start delaying wheat payments. As a result, the nation has been experiencing a foreign currency shortage.
The government recently agreed to a $500 million loan with the Abu Dhabi Exports Office (ADEX) to purchase imported wheat from Al Dahra, an agricultural company based in the UAE.