Egyptian shipments of wheat avert Russia's February new export duty

AFP , Ahram Online , Friday 26 Dec 2014

Russia is the third largest supplier of wheat to Egypt, itself the largest importer of wheat in the world

An Egyptian farmer, harvests wheat on his farm, in Qalubiyah, North Cairo, Egypt. (Photo: AP)

Russia will apply a duty on its wheat exports starting February, a month after the latest due shipments to Egypt, the world's largest wheat importer, are sent.

The Russian government has said it will apply a duty of at least 35 Euros ($43) per ton of wheat sent for export as it tries to lower prices on its domestic market, hit by the ruble's fall.

Russia's Grain Farmers Union warned the duty could lead to a possible "loss of confidence in Russia as a reliable supplier of grain to the international market, in particular by key importers such as Turkey, Egypt or Iran."

Egypt already signed deals to import around 180,000 tons of Russian wheat to be delivered throughout January.

Mamdouh Abdel Fattah, vice chairman of Egypt's grain buyer GASC, told Al-Ahram Arabic news website that suppliers are obliged to deliver the shipments in time according to contracts signed.

Russia is Egypt's third largest wheat supplier, providing 26.3 percent (765,000 tons) of the country's imports in the past six months, Abdel Fattah said. Egypt's primary two suppliers are France at 36 percent (one million tons) of imports in the same period and Romania at 26.8 percent (780,000 tons).

The duty in force from 1 February to 30 June will be 15 percent of the price per ton plus 7.5 Euros, with a minimum rate of 35 Euros per ton.

At a price of 225 Euros per ton, the duty of 41.25 Euros would still leave a price difference of over 20 Euros.

The duty, announced in a government decree published late Thursday, aims to narrow a price difference that has emerged as Russia's ruble has slumped by 40 percent against the dollar this year.

Even before it announced plans to introduce the duty in order to protect the country's "food security," market participants said the government had taken other measures to slow exports as it suddenly became difficult to book rail transportation and obtain food safety export certificates.

Wheat prices have risen on international markets over the past week as traders were anxious that Russia, usually the world's number three exporter, may ban exports as it did in 2010, when it had a poor harvest due to a drought.

According to government data, Russia has already exported 21 million out of a potential annual total 28 million tons since the export season began in July. It exported 25.2 million tons during the last export season that ended in June.

Egypt, purchased 2.9 million tons in the second half of 2014, making its wheat reserves sufficient through the last week of April when the local wheat harvest begins.

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