Tensions between world's largest wheat exporters raise market uncertainty, warns Egypt

Amr Kandil , Sunday 13 Feb 2022

Egypt said it has diversified its wheat import sources including from the US, France, Romania, as well as Ukraine and Russia, warning that “skirmishes between the world's largest exporters of wheat and grain raises a state of uncertainty in the market."

An Egyptian farmer harvests wheat in a field. Reuters

On the sidelines of the inauguration of an experimental centre affiliated to Assiut Chamber of Commerce, Minister of Supply and Internal Trade Ali Moselhy said Egypt has secured a strategic reserve of wheat that would be enough for more than five months, state news agency MENA reported.

Moselhy’s remarks comes amid fears that the world’s wheat supply could be threatened by a Russian invasion of Ukraine.

Egypt imported 5.5 million tonnes of wheat, on top of 3.5 million tonnes that was produced locally, according to data released by the supply ministry in December.

The ministry forecast Egypt’s wheat imports in 2022 to drop to 5.3 million tonnes due to an increase in local production.

From July through November 2020, Russia exported 4.2 million metric tons of wheat to Egypt, 1.4 million metric tons more than this year. In 2021/22, Egypt – the world’s largest wheat importer – is importing more from the European Union (specifically Romania) and has already imported more from Ukraine, than it did in the entire 2020/21 trade year, according to February’s Wheat Outlook 2022 issued by the US Department of Agriculture (USDA).

Russia and Ukraine together account for 29 percent of global wheat exports, while the US export rates have been slowing in recent months dropping with nearly half last October compared to previous month to only 46 million bushels, the smallest monthly total in more than 30 years, said the USDA.

In his Sunday remarks, Moselhy said the ministry has taken precautionary measures to secure its stocks of wheat, noting that the local wheat supply season will start in mid-April and the strategic reserve will increase to suffice until next November.

Over the past two weeks, wheat prices have been lower than before due to sufficient supplies to global markets after recovering from the coronavirus pandemic impacts, Moselhy said.

Last month, Finance Minister Mohamed Maait said Egypt will raise the local wheat procurement price for the harvest beginning in April by around EGP 670 ($42.66) per tonne.

Maait said that the government decided to increase the prices of local wheat procurement to ease the burden on farmers.

He said that the state’s treasury has allocated around EGP 12 billion to purchase wheat after a spike in global prices due to turbulence in supply chains, a rise in freight rates and unprecedented inflation rates globally.

In November, Egypt raised procurement price to around $347 per tonne in a move meant to encourage farmers to increase the amount of cultivated land.

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