Egypt's New Wheat Purchasing Strategy Puzzles Traders

Egypt, one of the world's largest wheat importers, has significantly hindered traceability in the global grain trade through a restructuring of its purchasing process. The country's state-issued tenders and direct business deals have long been regarded as a key indicator of the competitiveness and export volumes of leading suppliers like Russia. Such purchases secure subsidized bread and until now covered almost half of Egypt's annual wheat imports. Previously, traders could access valuable details on offers and deals, as the majority of transactions were privately negotiated. However, since the purchasing responsibility was taken over by a new institution, this flow of information appears to have stalled, making it more difficult for market participants to gain insights into prices, origins, and quantities of wheat purchases. The General Authority for Supply Commodities (GASC), the former purchasing agency, conducted tenders until the end of last year and publicly disclosed information about submitted offers and purchases made, including the grain's country of origin and prices. Now, the Mostakbal Misr Agency for Sustainable Development, established by a presidential decree in 2022, has taken over this role and is procuring wheat through direct deals, without holding a tender so far. An initial attempt by Mostakbal Misr in November to secure wheat through direct negotiations was postponed, as unclear sales conditions required more time from suppliers. Traders were unsettled because the new structure provides less transparency and lacks crucial market information. According to trade information, 28,000 tons of Russian wheat arrived in Egypt for Mostakbal Misr by the end of December. Another 33,000 tons were booked in a private transaction early in the year. While Russia dominated about 70% of wheat deliveries to GASC last season, it remains uncertain how successfully Mostakbal Misr will operate in comparison. Market participants are skeptical about whether the new agency can match GASC's experience in negotiations with internationally active companies. A key point will be how frequently Mostakbal Misr plans and executes tenders.