Reuters – Two wheat cargoes purchased by top global wheat buyer Egypt are stuck at Russia’s Novorossiisk port, after the trade house selling the grain had problems opening the importer’s letters of credit, traders said.
Egypt’s state wheat buyer the General Authority for Supply Commodities (GASC) bought the two 60,000-tonne shipments from global commodities trader Cargill in a 27 February tender for 15-31 March shipment.
Cargill declined to comment and GASC was not immediately available.
Traders do not usually ship wheat until they have opened importers’ letters of credit.
Three traders focused on the Egyptian wheat market said the delay was a banking issue and was not linked to any financing difficulties at GASC.
An Egyptian government source with knowledge of the issue confirmed the delay in opening letters of credit and said the two ships were in Novorossiisk.
Although traders said the problem could soon be resolved as it seems to be an isolated incident, the mounting financial penalties against GASC for the shipments’ delayed departure are a blow for the government grain buyer.
Egypt will spend around EGP 32bn ($4.6bn) in the fiscal year ending June on its subsidised bread programme that feeds millions of poor Egyptians.
GASC has purchased 4.7m tonnes so far in the current 2013/14 season which ends on 30 June. The Supplies Minister told reporters earlier this week that he expected GASC to issue another international tender for wheat purchases before the local harvest begins next week.
Traders said that the three other suppliers to GASC in the 27 February tender have successfully opened their letters of credit.