Traders largely stayed away from the Egyptian government’s latest wheat tender, boding ill for the country’s ability to source much needed wheat.
Despite a couple of big purchases recently, the world’s biggest wheat buyer has a lot of catching up to do after a prolonged disruption to wheat buying earlier in the year.
A tender for wheat uncovered just three offers, and at higher levels than in the previous round, earlier this week.
Lagging last year’s pace
In the end Gasc, the state grain buyer, purchased just one 60,000 tonne cargo, from Aston at $192.50 a tonne, and $9.64 a tonne freight.
Earlier this week, at a much better attended tender, Gasc bought a cargo of wheat from Aston at $189.87 a tonne, and $10.30 a tonne freight.
Egypt has to up the pace of its wheat purchases, if it is to make up for the failed tenders this summer, and late last year, due to confusion over the country’s ergot quarantine policy.
Gasc has bought some 2.28m tonnes of wheat so far this year. This is about 250,000 tonnes behind the pace of last year’s purchases.
If the government cannot source wheat for its subsidised food programme, there are fears that political discontentment may boil over into violence.
And it may have been the early effects of that unrest which discouraged sellers, worried about booking exports to an unstable destination.
In the end planned protests failed to materialise, with streets in Cairo reported empty on Friday, apart from large numbers or riot police.
Another factor discouraging sellers may be ideas that Gasc will struggle to source the dollar-denominated letters of credit for those shipments especially after a local currency devaluation.
The Egyptian pound has nearly halved against the dollar, after it was floated last week.
The devaluation of the currency was done to appease the IMF, and is intended to clear the way for a big dollar-loan from the IMF, with an initial payment of $2.75bn being voted on by the bank’s board on Friday.
But if that fails to materialise, liquidity problems will only worsen.
(Source – http://www.agrimoney.com/news/sellers-shun-egyptian-wheat-tender–10152.html)