Russia throws wheat sale to Egypt into turmoil over price floor

Egypt’s latest wheat tender has ended in dispute as an increasingly assertive Russian state tries to impose an unofficial minimum export price.

Russian trader Agric SA sought to withdraw its winning offer of $229 a ton, after failing to get approval from Russia’s agriculture ministry, according to people familiar with the matter. Moscow wants to implement a price floor of $240 for exports, the people said, asking not to be identified as the information is private.

The spat shows Russia, the world’s biggest wheat shipper this season, increasingly flexing its powers in the global market following its invasion of Ukraine. As well as the Kremlin periodically throttling Ukrainian shipments through a safe corridor, Russian traders are gaining more power in their home market as international players like Cargill Inc. and Louis Dreyfus Co. prepare to leave.

Egypt’s state-run buyer, the General Authority for Supply Commodities, usually officially confirms the results of tenders, but so far hasn’t done so for the one on Tuesday. GASC threatened to keep a $400,000 guarantee if Agric SA can’t fulfil the contract, some of the people said. 

GASC didn’t immediately respond to requests for comment. Russia’s agriculture ministry declined to comment. No contact information for Agric SA can be found online. Russia’s grain union on Tuesday tweeted a video of a raccoon, referencing GASC, Agric SA and the prospect of a default. 

Russian daily Vedomosti reported earlier that the agriculture ministry recommended that exporters not sell wheat on the international market for less than $240 a ton. 

Egypt is a major customer of Russia. The North African nation’s purchases have become less transparent, as GASC began booking some wheat in private talks with traders. That marked a shift from its historical process of securing supply in tenders.