In season 2017/18, Russia is once more projected to become the world’s top wheat exporter. Egypt, the world’s biggest wheat importer, is the largest market for most Black Sea exporters. Around half of Egypt’s wheat imports are purchased by the General Authority for Supply of Commodities (GASC), its state food procurement agency, employing a competitive tender system.
Based on a unique series of GASC tender prices, this study investigates their relationship with export prices from the Black Sea region and further major exporting countries. Applying linear and threshold vector error correction models, we find that all examined export prices in the Black Sea region continuously and rapidly adjust to GASC tender prices indicating a strong influence of the GASC tender price on Black Sea wheat price discovery in general. We trace this back to the fact that the GASC tender system enhances transparency about competitive prices of the Black Sea wheat market, where an effective price discovery mechanism through a commodity futures market is still missing.