April 6, 2016 / 10:32 AM / 4 years ago

UPDATE 3-Egypt cancels rice tender, says will contract directly if prices stay high

(Adds GASC’s cancellation of tender)

CAIRO, April 6 (Reuters) - Egypt will seek direct contracts to buy rice from abroad if prices offered by traders in its tender competitions are not reduced, the government said on Wednesday as it seeks to overcome a local shortage blamed on suppliers hoarding stocks.

State grain buyer GASC said it cancelled a tendering for an unspecified amount of rice after offers it received did not comply with its specifications or shipment dates.

It was GASC’s third rice tendering cancellation since it started seeking the grain on international markets. GASC failed to make a purchase from a tendering last week after being unable to agree on prices with suppliers.

“We may resort to importing rice directly should the high prices of rice being offered at tenders continue,” Supply Minister Khaled Hanafi told Reuters.

But traders have said the government is insisting on prices which are unrealistic. “They might as well ask for the rice for free if it’s any cheaper. They won’t find anyone to sell directly to them,” one Cairo-based trader said.

Egypt produced 3.75 million tonnes of rice in the 2015 season and held over 700,000 tonnes from 2014. With consumption at 3.3 million tonnes, that leaves a surplus of more than 1 million tonnes.

But the government’s failure to stock up earlier in the season has left it at the mercy of traders, some of whom have been unwilling to sell to the state and are choosing to stockpile instead as domestic prices are rising daily.

GASC has started seeking international tenders to import the grain as a way out of the problem. At its most recent tendering this week it received just two offers for Indian rice, one for $350 per tonne and another for $390 per tonne, of 10,000 tonnes of 5 percent broken rice.

These offers are considered cheap compared with the price of between $370 and $380 per tonne that the rice fetches on the Indian market before shipping to Egypt, one German trader said.

Egypt said last week it would reinstate an export ban on rice to preserve stocks for the local market and control rising prices. (Reporting by Ehab Farouk, Maha El Dahan and Michael Hogan; Writing by Eric Knecht; Editing by David Holmes and Greg Mahlich)

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