* Traders expect GASC to buy 500,000-700,000 before harvest
* Tender offers could include premium of $3-$5 per tonne
(Adds trader comment)
CAIRO Feb 25 Egypt's government has approved
financial guarantees of $75.3 million for the import of wheat,
the finance ministry said on Tuesday, raising the possibility
of a fresh purchase tender despite a shake-up in its import and
Traders expect the world's largest importer of wheat to buy
between 500,000 tonnes and 700,000 tonnes from the world market
before its local crop is harvested in April.
"This is for new tenders, it looks like routine but hefty
trade finance guarantees," a European grain trader said.
Egypt's supplies minister said on Feb. 10 that strategic
stock of wheat was enough to last until June 15. The government
tendered its resignation on Monday.
The finance ministry statement did not say when General
Authority for Supply Commodities (GASC) might purchase wheat,
but the amount would allow for import of 240,000 tonnes.
Egypt's last purchase was on Jan. 28, when it bought 240,000
tonnes of Russian and U.S. wheat for shipment March 1-10.
Since then, Egyptian authorities have referred the head of
the central import administration at GASC to prosecutors for
suspected corrupt dealings with traders. The head of its silos
and storage holding company was also sacked.
The government has said its wheat imports would not be
affected by a corruption probe at GASC.
"They need to purchase and they have enough people to do
so," a second European trader said.
When GASC awards a tender the company selling the wheat
typically asks for the issuance of an Egyptian state bank letter
of credit, which is then confirmed with its own bank.
Last year funding problems triggered an additional
requirement for GASC to post cash with Egyptian banks which
serves as security for the banks confirming the letters of
credit on behalf of sellers. [ID: nL6N0BS71E]
Traders say there would be a very small pool of countries
able to deliver wheat in the short time frame anticipated to be
stipulated in any tender.
Black Sea wheat was expected to be the most competitive
region if a tender was issued in the near term, particularly
since the specifications concerning wheat moisture levels had
been lowered to a level that French wheat struggled to meet.
One trader said Egypt may have to pay a small premium of
$3-$5 per tonne.
"The premium will also be because of the uncertainty and
rumours on where GASC stands because of their internal
problems," the trader said.
Egypt buys around 10 million tonnes of wheat a year from
abroad through the state and private buyers.
The finance ministry also approved guarantees of $52.4
million for the import of 58,500 tonnes of food oil, the
(Reporting by Tom Perry in Cairo and Sarah McFarlane in London;
Additional reporting by Michael Hogan in Hamburg; editing by