Egypt's new commodities importer has asked Russian grain exporters to come up with ways to reduce transaction costs on wheat deals, according to Dubai-based publication Asharq Business.

But the former head of the Russian exporters' lobby group says he does not expect Egyptian importers to move away from the traditional method for paying for Russian grain via letter of credit (L/C) transactions.

Organisational change

In December 2024, Egypt's Mostakbal Misr Agency for Sustainable Development assumed responsibility for importing strategic commodities, including wheat.

This agency replaced the old-established General Authority for Supply Commodities (GASC), which used L/C transactions to do business with foreign exporters, a transaction method that has been generally well regarded by Egyptian importers.

The transition aims to streamline procurement processes by utilising both international tenders and direct purchase agreements.

L/Cs preferred

But according to the former head of the Russian Grain Exporters and Producers Union (Rusgrain) , members of the union expect Mostakbal Misr to continue utilising financial guarantees developed for GASC tenders, such as L/Cs backed by a major Egyptian bank.

"Deviating from the L/C form could increase the cost of Russian wheat due to heightened financial risks, which they [the grain traders] would like to avoid," Eduard Zernin told Asharq Business shortly before he ceased to head of Rusgrain.

More flexibility

The restructuring of Egypt's procurement processes and the introduction of direct purchase agreements suggests a potential for more flexible financial arrangements.

But it seems that these are likely to include L/Cs to ensure the steady supply of essential commodities like grain.

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