Russian state grain trader United Grain Company (UGC) Monday denied that it had defaulted on a wheat shipment to Egypt, adding it was considering legal procedings against its counterparty in the deal
Russia is a top supplier of wheat to Egypt, however its dominant position in supplying the North African country may weaken as Russia is suffering a severe drought in key producing regions.
UGC said Egyptian grain trader Venus International claimed damages based on a contract to ship 60,000 tonnes of wheat after a June 26 tender , which the Russian company says it had not signed.
"The Russian company has not signed a contract with Venus International to supply 60,000 tonnes of wheat to Egypt," UGC said in a statement.
A spokesman for Venus International was not immediately available for comment.
UGC said Venus, after winning the tender on June 26 and agreeing to supply the grain to the Egyptian government between July 21 and 31 for $165 per tonne, asked UGC on June 28 to provide the grain.
UGC sent to Venus on July 12 a preliminary proposal to supply the grain at $170 per tonne in the beginning of August. On July 13, Venus preliminarily agreed to buy the grain, but unilaterally changed some details of the contract, UGC said.
"UGC neither approved, nor signed the contract," the statement said.
After prices started rising in the middle of July because of the worst drought in 130 years, which has devastated some Russian grain growing regions, UGC informed Venus that it could not afford to sign a contract at the preliminarily agreed price.
However, Venus insisted on the shipment and claimed damages.
"To protect its honour and business reputation UGC is considering the possibility of launching a legal suit against Venus," UGC said.
