(Bloomberg) -- Egypt is struggling to complete a large purchase of Russian wheat that was due to be loaded this month, raising questions about the dealmaking between two of the largest players in the market.
One of the world’s biggest wheat buyers, Egypt last month said it purchased 430,000 tons from top-exporter Russia. Shipment was planned for October, with delivery no later than the first week of November, according to the state buyer.
But the deal is showing no sign of progress, with just days left before the wheat was set to be loaded, according to traders familiar with the matter. Ships to collect the grain haven’t been nominated, and the necessary paperwork hasn’t been carried out, they said.
It’s not clear what is causing the delay, and Egypt’s grain-buying agency GASC declined to comment. The Russian grain exporters’ union indicated on Sept. 18 that there’s been disagreement over who Russian sellers should be dealing with in Egypt.
“Some Russian traders were approached by an intermediary company that said it was purchasing grain on behalf of GASC, which is contrary to established Egyptian government procurement practices,” Eduard Zernin, head of the Russia’s Union of Grain Exporters and Producers, told Bloomberg this week.
Russia has increasingly been trying to work without intermediaries in grain sales, as part of wider efforts to tighten its grip on the trade, which is both an important source of revenue and of diplomatic soft power.
The Russian agriculture ministry didn’t immediately respond to a request for comment.
As the delay goes on, the risk for Egypt is that Russian wheat prices continue to rise.
Cairo usually procures grain in open tenders or private deals for supplies just a few months into the future. In August, the government took the unusual step of seeking almost 4 million tons — about a third of what the country imports annually — to take advantage of lower prices at the time, and to secure provisions due to regional turmoil.
In the end, it bought only a fraction of that amount, highlighting the challenges of securing large volumes months in advance. It hasn’t held another tender since then.
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