Egypt Launches a New Wheat-Trading System
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Egypt launched the new commodities exchange on November 27, the Supply ministry said in a statement, with General Authority for Supply Commodities (GASC) offering 12,000 tons of Russian Wheat from its reserves to private sector mills. On the first day of trading, Wheat was sold at 9,750 Egyptian pounds ($397) per ton in 18 transactions, according to the Supply ministry. This means that this does not affect the strategic reserve: the Egyptian Holding Company for Silos and Storage (EHCSS) will be the party obligated to deliver.
Egypt’s state grains buyer will be able to make international Wheat purchases through a newly-launched exchange that is also aimed at eliminating local price distortions, its Chairman said. With grain markets disrupted this year by fluctuating prices and the war in Ukraine, Egypt’s GASC has been diversifying its purchasing methods.
The Ministry of Supply noted that the GASC started trading Wheat on Sunday via the Egyptian Mercantile Exchange (EMX). The number of purchase orders registered on the EMX platform reached 28, with a total quantity of 19,780 tons, an increase of 65 percent of the total amount offered by the Supply Commodities Authority as a seller, with an average price of 9,613.4 Egyptian pounds. Another trading session will be held on Wednesday, November 30, 2022, at 2 pm.
GASC can also procure local Wheat from farmers via the exchange, noted Ibrahim Ashmawy, Deputy supply minister and chairman of the exchange. “If today GASC is a seller (on the exchange), tomorrow it can be a buyer. It’ll have different channels. We are in dire need of the exchange to regulate the market. The market is not in its best shape, and there’s a lot of price distortions.”, he added.
GASC asked global suppliers to register at the bourse by November, but traders said there was confusion over whether the suppliers or their local agents were required to do so. State-run GASC recently opted to buy directly from global suppliers instead of through its traditional tender system as it looks for more competitive offers.
The new exchange is designed to operate as a spot market with prices determined by supply and demand. For now, it is running on a “closed bidding” system, where bidders submit offers in a sealed envelope, and GASC selects the best one. Two hundred companies, including 36 mills, have registered on the exchange in Cairo, where the Egyptian Government is studying the possibility of trading ten more commodities, including rice, gold, and steel.
The move follows complaints by private importers and mills in Egypt struggling to pay for hundreds of thousands of tons of Wheat stuck at ports because of a dollar shortage that has curtailed imports, causing a spike in bread and flour prices.
Egypt’s Wheat Import
Egypt’s state grains buyer is believed to have bought 280,000 tons of Russian Wheat via direct purchases. The lowest C&F offer at the tender was $369.95 per ton for 40,000 tons of Russian Wheat, with traders adding that GASC was negotiating for a price of $360 per ton. This year Egypt has been opting to buy grain through private talks with traders. Egypt has a safe strategic reserve of various basic commodities, and that Wheat reserves are sufficient for five months.
According to the AgFlow data, Russia led Egypt’s Wheat import market with 5.8 million tons in 2021 – 2022, followed by Ukraine (4.1 million tons), Romania (2.3 million tons), Bulgaria (0.4 million tons), and Lithuania (0.1 million tons). The other importers were Germany, Australia, France, Latvia, and Brazil.
Other sources: SIS
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