Big wheat buy

Big Russian wheat buy: GASC bought 480k metric tons of wheat from Russian commodity trader Solaris in a direct purchase on Friday, Reuters reports, citing four unnamed traders. The state grain buyer reportedly bought the wheat for USD 270 per metric ton on a cost and freight basis (C&F).

With a side order of Bulgarian wheat: GASC also directly bought one cargo of Bulgarian wheat at the same price C&F on Friday, Reuters says.

When the price is right: The price is lower than the offers submitted by Russian traders in an international tender last week, where they apparently stuck to an unofficial price floor set by the Russian government at some USD 270 per ton on a free-on-board (FOB) basis — meaning shipping costs are not included in the offer. GASC chose to buy from Romanian and French suppliers in that tender, with traders telling Reuters that the price floor had hampered the competitiveness of Russian offers. The price secured is also lower than the typical offers in an international tender.

There’s a lack of consensus regarding Russia’s wheat price floor, which has been varying based on the type of sale and the month in which the sale occurs, with discounts for lower grades of protein wheat, according to traders. The wheat floor is not legally binding but traders are expected to adhere to it.

REMEMBER- GASC began to buy directly from suppliers — rather than through its traditional international tenders — last year, after the war in Ukraine triggered a surge in global food prices.

Russia is our biggest supplier: Egypt has imported close to 2 mn tons of Russian wheat so far in 2023, according to our math. This week’s direct purchase is the second big buy this year after GASC bought 600k tons in May.