Egypt’s main government wheat buyer on Thursday turned to Canada and other markets for a second time in a week, suggesting the procurement process for the world’s biggest importer has not been disrupted by political turmoil.
Egypt sought offers from top exporting nations such as the United States, Canada and Australia after prices at the Chicago Board of Trade fell 2.6 per cent — the biggest one-day drop since November.
The tender suggested that the General Authority for Supply Commodites (GASC) unit was functioning normally even on a day when the presidency of embattled Hosni Mubarak seemed to hang in the balance amid a popular uprising.
Mubarak looked likely to step down on Thursday, ending his 30-year rule, after the military high command took control of the nation in what some called a military coup after two weeks of unprecedented protests by Egyptians.
But he later said he was not standing down, although he transferred power to his vice president.
“That tells me that their purchasing system did not fall apart,” said grains analyst Shawn McCambridge of Prudential Financial in Chicago. “Their banks reopened over the weekend and things like letters of credit are being issued.”
The tender comes at a time when restive nations in North Africa and the Middle East have been scrambling to build their reserves of grains to ensure food security.
McCambridge said there were concerns over whether a change in the country’s leadership could lead to a disruption of business. “But we have to keep in mind, whoever is in charge will want to keep food flowing to the population,” he said.
An export trader with a grain company in the U.S. said his company was of two minds about offering to sell U.S. wheat at the tender set by GASC.
“We are not sure what kind of a government there might be in the coming days in Egypt,” he said, adding that the risk premium on offers would be higher than in the last tender because of the political uncertainty.
Another export trader said U.S. wheat was likely to face stiff competition from supplies in Australia, Argentina and France at the tender, whose results will be announced Friday.
Apart from wheat, Egypt is also a significant buyer of corn and soybeans from the U.S., the world’s top exporter of all three commodities.
GASC, the Egyptian state’s main wheat buying agency, on Thursday set a tender to buy an unspecified amount of soft wheat from global suppliers for April 1-10 shipment.
Nomani Nomani, vice-chairman of GASC, one of the world’s biggest state importers of wheat, is seeking to buy:
- 55,000-tonne cargoes of U.S. hard red winter wheat
- 60,000-tonne cargoes of U.S. hard red spring wheat; U.S. dark northern spring wheat; hard Canadian wheat; and Australian hard wheat
- 55,000-tonne cargoes of U.S. North Pacific soft white wheat
- 60,000-tonne cargoes of U.S. soft red winter wheat; Canadian soft wheat; French milling wheat; Australian standard white wheat; German milling wheat; Argentine bread wheat; UK milling wheat (ukp or uks variety)
— Additional reporting for Reuters by K.T. Arasu in Chicago.