Import Wheat Tenders and the Effects of the Russian Invasion

ABSTRACT Risk and volatility for many commodities escalated sharply following the Russian invasion of Ukraine, creating numerous uncertainties for trading firms and importers. The purpose of this study is to analyze the bidding behavior in Egyptian wheat import tenders in the pre‐ and post‐invasion periods. Bids for each bidder in individual tenders were analyzed for the period from 2017 to mid‐2023. The results indicate that before invasion, there were lower standard errors, margins, and higher probabilities of bidding. These changed in the post‐invasion period and as a result the probability of winning, optimal bids and implied margins increased. Implications were identified for buyers, sellers and industry and policy analysis. First, bidding competition is important and strategically important. Second, for sellers, determining optimal bids is a strategic calculation and requires knowledge about competitors, competitor bids, and relationships over time, as well as a derivation to determine optimal bids. Third, buyers require a larger number of independent and symmetrically well‐informed bidders to fully exploit the virtues of bidding competition.