The General Authority for Supply Commodities (GASC), Egypt's national grain buyer, announced a tender for international purchases on Tuesday for a maximum amount of 3.8 millions metric tons wheat. Offers are due by August 12.

GASC wants to buy wheat from Egypt for shipment dates ranging between 1-15 or 16-30 each month, starting October. The shipment will take place in April. Egypt will buy the wheat using letters of credit with a 270-day term.

GASC has asked traders to submit offers for shipments of at least three-months' worth.

It is the first instance that GASC has sought to import several months' worth of wheat in one single tender. This, traders say is a major change in GASC’s entire purchasing strategy.

One trader said, "This is an odd tender."

We usually send out bids on shipping one or two months in advance. "It would be difficult to make a bid for freight six or seven month in advance," said he.

One trader commented that the 270 day payment period is an incredibly unappealing concept.

He added, "I don't think they can sell the entire volume."

A third trader, however, said that trading houses would want to win the contract and they will simply add the bank costs associated with the 270 day payment delay in their offers.

GASC stated that it intends to keep a reserve of wheat sufficient to cover nine months' worth of demand.

In July wheat Egypt’s strategic wheat reserves were sufficient to last for 6,9 months.

Egypt is one of the largest importers of wheat in the world, mostly to supply subsidised breads for its tens and millions of people. This requires around 800,000 tons of wheat each month. It appears Egypt is trying to store large quantities of wheat or, at the very least, get them on its books. The reason could be Egypt's economic problems, or the possibility of a larger war in the Middle East.

They could be shooting themselves in the back by purchasing in advance and then regretting it later if prices drop. (Reporting and editing by William Maclean, Jonathan Oatis, and Nadine Ezz)

(source: Reuters)