Egypt Says It Has Paid for Wheat — Did Ukrainian Traders Get the Money, and How Did a “Grain Jam” Form in Egyptian Ports? Latifundist.com Explains

The Egyptian state operator Mostakbal told Reuters that the payment situation for wheat shipments has been resolved: according to them, the delayed cargoes are now gradually being unloaded, and payment issues have been lifted. The delay was attributed to new requirements from Egypt’s Central Bank regarding letters of credit (LCs) and verification of product origin.

“Payment problems for a number of wheat cargoes delayed in Egyptian ports were quickly resolved... As of Wednesday evening, the issue had been settled, and vessels are now gradually being unloaded.”

However, sources interviewed by Latifundist.com say that payments are being processed unevenly: two traders said they have not yet received funds, but the Egyptian side promised to make transfers early next week. Among them was Yunus Yusupov, CEO and Junior Partner at Westhim Ukraine, who confirmed that payments had not yet been received.

Meanwhile, Rafael Goroyan, owner of Prometey, told Latifundist.com that “we have the letters of credit in hand”:

“The money will come — the process is just taking longer. We are now discounting the LCs, meaning we’re receiving early payment through the bank. It’s a standard procedure; it just takes weeks instead of the usual two or three days.”

Earlier this week, Kostiantyn Kuflik, co-owner of Qortia AG, told us the company had received SWIFT confirmations for all shipments.

Last week, Latifundist.com reported that in September–October, about 200,000 tons of Ukrainian wheat were “stuck” in Egyptian ports — eight vessels at anchorage awaiting payment for government contracts with Mostakbal (either directly or via intermediaries).

“In early October, we saw Egyptian demand disappear for at least a week... Up to 15 vessels were at anchorage, and this immediately hit prices on the Egyptian market,” said Christina Serebriakova, broker at Atria Brokers and CEO of ASAP Agri.

The key breakdown occurred in the banking chain — the bank responsible for opening letters of credit (LCs) for grain payments was changed.

“The reason was the change of the bank inside Egypt. All payments go through LCs, and when the issuing bank, currency, or payment policy changes, a pause immediately occurs. The LC is a slow instrument, so such situations are not rare for the region,” explained Oleksandr Yanev, co-owner of Zaria Trade.

Previously, state purchases were made through GASC, which had a well-established system: transparent tenders, verified banks, international creditors, and predictable payment schedules. After the change of the governing body, the mechanism became more fragmented, says Artem Skorobogatov, Partner at Interlegal.

Now, one institution signs the contracts, the central bank allocates the currency, and payments are processed by other financial entities that don’t always have sufficient resources or clear instructions. Local intermediaries have also entered the scheme — they buy grain themselves and then resell it to the state, the lawyer explains.

As a result, a multilayered system has formed in which delays can occur at any stage, he adds.

This time gap between contract and payment created a unique situation: the cargo arrives, but the documents “get stuck” in the system, and the losses from demurrage fall on the seller or charterer.

“Formally, no one violated the contract, but the time gap in payments already leads to financial losses. And this is where legal risks begin — which can grow into claims and arbitrations,” adds Skorobogatov.

Kostiantyn Kuflik of Qortia AG adds that, under international rules, a bank must respond within five working days after documents are submitted, “but this did not happen — Egyptian banks referred to internal checks, which delayed payments and left vessels waiting.”

According to Latifundist.com estimates, about ten Ukrainian companies were caught in the “traffic jam.” Last week, Qortia AG reported that six vessels under Mostakbal contracts were stuck in Egyptian ports. At the time of the interview, two had been fully unloaded, one was in the process of unloading, and two others remained at anchorage.

Yunus Yusupov, for his part, told us about five of his company’s vessels — three handysizes and two large coasters, totalling around 90,000 tons of wheat. Some were being unloaded, while others remained at anchorage.

Mostakbal Misr is a new state operator that, about a year ago, took over GASC’s functions for importing strategic commodities (including wheat). The transition was accompanied by procedural disruptions and initial scepticism from traders.

Analysts at Fastmarkets note that since the company’s entry into the market in late 2024 — following an unsuccessful attempt to manage official tenders — Mostakbal has been trying to buy grain directly on the open market. However, due to its procurement terms, particularly extended payment periods of up to 270 days under letters of credit, many suppliers were reluctant to engage. As a result, a large portion of purchases was made through third-party companies (including Isotech), often at a premium compared to Egypt’s standard private-sector prices.

Companies serving as conduits to the Egyptian market sign an official state agreement with Mostakbal, under which they then buy a “back-to-back” position in Ukraine — from a trader or a supplier responsible for fulfilling the contract, explains Daria Marchenko, broker at Atria Brokers.

In practice, these intermediaries receive the documents in their name, submit them to the bank, and handle settlements: paying the supplier, receiving LC payments, and forwarding funds. In other words, they act as trading agents.

Marchenko adds that such intermediary companies must have the financial capacity to act as middlemen — freezing their own funds to pay suppliers while waiting for Mostakbal’s reimbursement.

“When Mostakbal first entered the market, there was a lot of mistrust. Suppliers were hesitant to work directly, unsure how payments would go and what guarantees existed for contract fulfilment. Over time, the market adapted: traders saw that transactions worked, payments arrived, there was margin — and they gradually began entering. The further it went, the more sellers agreed to access the Egyptian market via intermediaries who acted as guarantors of both performance and payment,” she says.

We’re talking about enormous sums. According to market participants, a handysize vessel’s demurrage in Egypt can cost USD 7,000–10,000 per day, depending on the port and conditions. A week of delay means tens of thousands of dollars — sometimes even more.

Almost all industry sources are confident that the Egyptian side will not pay for the downtime.

Daria Marchenko explains: formally, compensation should be paid by the party responsible for the delay, but in dealings with the state, there has long been an unwritten rule — “no one pays for demurrage.” Previously, traders simply factored this risk into higher prices. However, the scale and duration of the current delays are unprecedented — both for Egyptians and for Ukrainian companies.

Kostiantyn Kuflik told us last week that demurrage for vessel delays has not yet been compensated, meaning the financial burden falls on traders. Later he added:

“We are now following the standard procedure — submitting demurrage claims (for vessel delays in ports). Of course, we will demand compensation because vessel downtime means extra costs that no one had planned for. But we believe this issue will also be resolved, as good communication has already been established between the companies.”

Most experts believe it will not. Despite the tense pause and significant costs, most market participants see no real alternative to the Egyptian direction. Egypt remains the world’s largest wheat importer and a key buyer of Black Sea grain — leaving this market would mean losing a strategic sales channel.

“This case is very serious — and once we get through it, it will probably become easier to trust further cooperation with Egypt. But the question is valid: where else can we sell? We compete primarily with russia, especially on the Turkish market — and we lose on price there. The Middle East is a complicated story: some supply Israel, but that’s a niche direction. Lebanon is a small market, and russians are actively present there,” said Yunus Yusupov.

Daria Marchenko also believes there are practically no real substitutes:

“Most sellers understand that this is almost our only major market. Egypt is not losing its position: the only real alternative is Syria, but transaction schemes there are still undeveloped, and payment risks are also present. In Asia, the market is now ‘closed’ to Ukraine by Australia and russia, and in Europe there are quotas, with very little room left.”

According to her, Ukrainian companies will continue to work with Egypt but with “increased financial and legal vigilance.” Marchenko adds that this story should prompt Ukraine to create a financial mechanism to support such cases — trade finance or partial payment insurance.

“The extremely sensitive issue of payment for delivered goods could be partly mitigated through factoring companies or more advanced trade finance tools. These instruments help bridge the so-called ‘cash gap’ and, with agreed deferred-payment guarantees, allow vessels to be unloaded faster — preventing demurrage and detention losses,” the broker notes.

Why is this important? Because, in this situation, it was Ukrainian traders who assumed most of the key risks, she explains. The state’s task is not to “close markets” but, on the contrary, to support businesses in moments of force majeure — so that Ukraine does not lose its strategic export routes.

Unloading is ongoing but unsynchronised: different suppliers have different document-processing speeds (queues, approval chains, resubmission timing).

According to Marchenko, the unloading appears to be happening in a rather random order, but the key thing is — the process has started.

“This is already a major positive shift. Most market participants expect that by next week the situation should stabilize, and we may even see new demand emerging,” she says.