Egypt changed tender requirements to imported wheat regarding protein and demurrage

07.02.2018

Egypt, the world’s largest wheat buyer, has set new tender terms, which, in its opinion, must set exporters at ease. Some trading companies stopped participating in purchase tenders organized by the state agency GASC. The reason is too high cost of demurrage in Egypt’s ports and too long vessel idleness, reports UkrAgroConsult on basis of Reuters information.

Excessively critical and often unjustified examinations of foreign grain cargoes by Egypt’s Quarantine Service have been lately entailing long times of vessel idleness. Grain suppliers insure their risks by raising tender bids above the global price level or by refusing to participate in tenders.

On Friday, February 02, the GASC made an attempt to solve the problem by amending the tender regulations. From now on, grain suppliers are only responsible for the first 12 days of vessel idleness, with a demurrage rate of $12000 a day. Earlier, demurrage was charged for any actual idleness time.

Also, the GASC raised the cost of grain sieving (if excessive content of detrimental impurities is revealed) from the previous $2 to $3.

Traders have stated the new conditions with a fixed demurrage rate would allow them to better plan expanses and include the risk premium thereto. Unambiguously, this will push up seller prices in tenders – this is what happened in the February 2 tender, though an overall global price upturn played its role, too.

To save the costs Egypt incurs importing wheat, the GASC has relaxed the protein content requirements for key grain origins. So, the minimum protein content limit was cut from 12% to 11.5% for Russian, Romanian and Ukrainian wheat, from 11.5% to 11% for French wheat, from 11.5% to 11% for US soft wheat and from 12.5% to 12% for US hard red wheat.

 

UkrAgroConsult

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