Egypt's state grain buyer said on Thursday it could tap the local wheat market to buy Black Sea grain in Egyptian pounds in an attempt to prevent smuggling of the commodity during the local procurement season.

Mamdouh Abdel Fattah, vice chairman of the General Authority for Supply Commodities (GASC), also said Egypt may use a special $100 million credit line the United States made available to the Egyptian government in recent years for purchases of U.S. wheat.

"This has been an option for us for some time, so if the prices are right and we feel the need to use that to buy U.S. wheat, we will," he said.

The Egyptian government annually fixes a local procurement price for Egyptian wheat that is above global prices in an attempt to encourage farmers to grow the crop.

The high price has led to a smuggling business in which traders sell the government foreign wheat, mostly Russian, falsely labelling it Egyptian. Abdel Fattah said he would try to buy the Russian wheat off the market before the local season.

"It is an option that is available to us and we are thinking of using it mainly to reduce the amount of smuggling of Black Sea origins into the local wheat-buying season," Abdel Fattah told Reuters.

GASC said there were around 500,000 to 700,000 tonnes of Russian grain in the local market.

One Cairo-based trader put the figure at 1.5 million tonnes, saying silos held 500,000 tonnes but there were around 1 million tonnes in Egyptian ports.

The move by the state grain buyer "would prevent smuggling and also give GASC a chance to buy something to blend with all the French wheat it has been purchasing", the trader said.

GASC has been relying heavily on French wheat purchases since Russia recently announced informal curbs on its wheat exports.

"Bakers in Egypt complain of the high moisture content in French wheat and GASC needs to have Russian or other origins to blend," the trader said.

GASC could also blend U.S. wheat with that from France.

"We believe they intend to use that money to purchase U.S. wheat," said a wheat industry source familiar with the situation, referring to the U.S. credit line.

"So the next tender may be internally earmarked for U.S. wheat purchases with those funds," the source said.

Abdel Fattah declined to comment on prospects for a special tender, saying price served as the only driver in GASC's purchasing decisions.

The standing line of credit was specifically to provide an option to use dollars and repay in Egyptian pounds if GASC chose to buy U.S. wheat, Abdel Fattah said.