The ongoing Russo-Ukrainian war has left Egypt’s wheat import prospects in turmoil, with two cargoes purchased by Egypt’s state buyer stuck at the Ukrainian ports, making other deliveries at risk, and has sent prices soaring, according to traders.
Egypt is often the world’s top importer of wheat and last year, wheat traders say some 50% and 30% of state and private sector imports came from Russia and Ukraine respectively.
Data from Egypt’s Transport Ministry showed that since the Russian invasion of Ukraine, one cargo of Ukrainian wheat purchased by Egypt’s state buyer, the General Authority for Supply Commodities for Feb. 15-March 3 shipment was able to leave port with 42,700 tonnes of the 60,000 tonnes that had been booked. A further 180,000 tonnes of Romanian wheat has been booked for April.
Purchases by Egypt’s state buyer, the General Authority for Supply Commodities (GASC), go towards heavily subsidised bread available to more than 60 million Egyptians. The government says it intends to reform the programme as it tries to limit its import bill, but no plan has been announced yet.
Egypt’s deputy supply and internal trade minister Ibrahim Ashmawy said the General Authority for Supply Commodities says it has two tenders since Russia’s invasion but cancelled both because of a lack of bids, was “testing the water” to assess prices with the second, and was in no rush to buy, as the country still has reserves.
Ashmawy added that Egypt was confident in existing reserves and in the quantity of wheat that would become available from the local harvest, which could suffice for nine months.
He further added that Egypt will look into the EU for future imports due to proximity but will not exclude other exporters like the U.S., Kazakhstan, and Romania.
Egyptian government disclosed that it is still discussing with Citibank, as well as other unnamed banks, options for hedging against commodity price fluctuations, though Ashmawy said it might “not be the best time ever to hedge when prices are very volatile.”