The situation in Egypt’s grain market now resembles a “house of cards” — Interlegal

Systemic payment delays have emerged in Egypt’s grain market following changes in the country’s state procurement mechanisms. According to Artem Skorobogatov, Partner at the international law firm Interlegal, the new structure of interaction between government agencies, banks, and intermediaries has created a chain in which any disruption can halt the flow of funds.

Context. On October 23, Latifundist.com reported that eight vessels carrying Ukrainian wheat remained anchored off Egyptian ports due to delays in opening letters of credit for the state buyer Mostakbal. Market participants estimated that around 200,000 tons of grain were still unpaid for.

According to Skorobogatov, the situation in Egypt’s grain market currently resembles “a house of cards” — a chain involving multiple interlinked parties where any delay can block the movement of money.

He believes that the current difficulties are not related to bad faith on the part of any party but are rather a consequence of changes in state procedures following the transfer of procurement authority.

“Previously, state procurement was carried out through GASC, which had a well-established procedure: transparent tenders, verified banks, international creditors, and predictable payment schedules. After the responsible body changed, the mechanism became more complex,” Skorobogatov explained.

Now, contracts are signed by one entity, foreign currency is allocated by the central bank, and payments are processed by other financial institutions that may lack sufficient resources or clear instructions. Local intermediaries have also entered the scheme — they purchase grain in their own name and then resell it to the state. As a result, a multilayered system has formed, where any stage can cause a payment delay.

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

“Formally, no one has breached the contract, yet the time lag in payments already leads to financial losses. And this is where legal risks begin — ones that can escalate into claims and arbitration,” the lawyer noted.

In practice, market participants choose different strategies: some wait in hopes of receiving payment, while others resell the cargo, fixing losses but maintaining control. The winners are those who document every step, as even a single email can determine who will be the plaintiff and who the defendant in court.

Skorobogatov emphasized that Egypt will remain a key market for Black Sea grain, but unless conclusions are drawn internally, traders will have to approach this destination “with heightened legal caution” — anticipating unpredictable financial delays and operational risks, and always having a contingency plan.