Egypt’s wheat import shift from GASC triggers 10% price surge, supply concerns

EGYPT – Egypt’s recent shift in wheat procurement has driven up domestic wheat prices by 10%, as heightened demand from Mostakbal Misr strains local supply chains, according to traders.

The military-affiliated entity took over wheat import responsibilities four months ago, replacing the General Authority for Supply Commodities (GASC), which previously managed international tenders with structured financing agreements.

The abrupt transition has not been smooth, with traders noting that Egypt, one of the world’s largest wheat importers, has become less transparent in its procurement process.

Instead of direct purchases through global tenders, Mostakbal Misr has been sourcing wheat primarily from local Egyptian importers, who rely heavily on Russian supplies.

However, Russian suppliers have expressed hesitancy in dealing with Mostakbal Misr due to its lack of experience in commodity trading, leading to increased reliance on domestic intermediaries.

Traders report that representatives of Mostakbal Misr are actively present at ports and agricultural offices, overseeing incoming shipments and negotiating at its headquarters to secure part or all of incoming cargo.

Despite paying local suppliers in Egyptian pounds, Mostakbal Misr continues to charge the state in U.S. dollars and still depends on GASC for managing financing arrangements, further complicating the transition.

This has raised concerns about inefficiencies, as the financing partners, including the International Islamic Trade Finance Corporation (ITFC) and the European Commission, have not yet recognized Mostakbal Misr as the official purchasing agency.

Both organizations have recently committed financial backing for Egypt’s grain imports through GASC rather than Mostakbal Misr, adding uncertainty to the process.

Meanwhile, Egypt’s wheat reserves have declined to cover only five months of consumption, including future deliveries, down from seven months in mid-2024.

Since assuming its new role, Mostakbal Misr has secured contracts for 2.7 million metric tons of wheat from Egyptian suppliers, including 1.7 million tons for delivery in February and March. However, only 850,000 tons have been delivered so far.

A significant portion of these purchases, approximately 1.7 million tons, were financed using 270-day letters of credit, while another 900,000 to one million tons were backed by ITFC funding.

Despite these arrangements, Mostakbal Misr still relies on GASC for purchase management, raising questions about the efficiency of the financial framework.

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