Payment snag delays French wheat cargoes for Egypt

Three ships due to load more than 180,000 tonnes of French wheat for Egypt were still waiting off France's northern port of Dunkirk on Monday because exporters had not received letters of credit, trade and shipping sources said. The shipments are part of tender purchases made by Egypt's state grain buyer, the General Authority for Supply Commodities (GASC), with one cargo due for shipment on December 11-20 and two on December 21-31.

None of them had loaded by Monday, port data compiled by Reuters showed. "The delay is purely linked to the letters of credit that are still missing," a European trader said. When state tenders are awarded, the firm selling the commodity asks for a letter of credit from one of Egypt's state-owned banks, which is then confirmed with its own bank.

Some traders have experienced delays receiving letters of credit for supplying goods to state buyers amid an acute shortage of currency reserves in Egypt. Shipping sources said at least two of the French wheat cargoes were unlikely to load this week, but traders said there were signs the problem could be solved next week.

GASC was not immediately available to comment. In a move seen as a response to the foreign currency squeeze, GASC last month changed the payment terms for its wheat tenders, allowing letters of credit to be opened up to 180 days after signing the contract. The three cargoes of French wheat were purchased in tenders held before the change in payment terms. Some traders said the delays were also linked to concern about whether the cargoes would be cleared by the Egyptian quarantine authorities.