Lengthy payment terms on letters of credit (L/Cs) could be a key factor deterring suppliers from participating in Egypt's largest ever single wheat tender.

The tender issued by Egypt's General Authority for Supply Commodities (GASC) is to import 3.8 million metric tonnes of wheat.

Unattractive terms

GASC, the Egyptian government's main body responsible for importing wheat and other essential foodstuffs, is seeking extended payment terms from suppliers involving L/Cs with 270-day payment terms, which market analysts say is unattractive to suppliers.

Apart from lengthy payment term on L/Cs, the tender also appears unattractive due to longer than expected shipping periods and suppliers' perception that GASC is taking advantage of low wheat prices. Global wheat prices fell earlier this month to four-year lows.

Ukraine and Bulgaria

So far, the GASC has only booked 280,000 tonnes of milling wheat against the tender.

It has been sourced from Ukraine and Bulgaria, with Ukrainian wheat being offered at the lowest price of US$244 per metric tonne.

Suppliers' offers

The sellers in Ukraine and Bulgaria are amongst around 16 suppliers believed to have submitted offers for GASC's largest single wheat tender.

Traders have been invited by GASC to submit offers for shipments to arrive in Egypt between October 2024 and April 2025.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.