Egypt’s wheat import prospects are in disarray following Russia’s invasion of Ukraine, with two cargoes purchased by the country’s state buyer stuck in Ukrainian ports, other deliveries in jeopardy, and prices soaring, traders say.
However, Egypt has enough reserves that it won’t rush to purchase grain as it assesses the prices outside Ukraine and Russia, according to the deputy supply minister.
The world’s top wheat importer is often Egypt. Russian and Ukrainian imports made up 50% and 30%, respectively, of state and private sector imports, according to traders.
More than 60 million Egyptians receive heavily subsidised bread through purchases made by Egypt’s state buyer, the General Authority for Supply Commodities (GASC). Government officials say they intend to reform the program to reduce the import bill, but they have not announced a plan yet.
Since the invasion of Russia, GASC has cancelled two tenders.The ministry canceled the first auction due to a lack of bids, was “testing the water” with the second to assess prices, and was not in a hurry to purchase, Ibrahim Ashmawy, deputy supply and internal trade minister.
We are looking into the EU for future imports this year, he said, but we will not exclude other exporters such as the U.S., Kazakhstan, and Romania.
However, he added that Egypt was confident about the existing reserves and the amount of wheat that was available locally, which would suffice for nine months.
Citibank, among other unnamed banks, is still discussing trade options with the government, though Ashmawy said the current market environment might not be a good opportunity to hedge.
According to data from Egypt’s Transport Ministry, one shipment of Ukrainian wheat purchased by GASC for shipment between Feb. 15 and March 3 was able to leave port with 42,700 tonnes of the 60,000 tonnes that were booked.
The data shows, however, that two other cargoes totaling 120,000 tonnes purchased in December are stuck in port.
The company has also purchased 120,000 tonnes of Romanian wheat and 300,000 tonnes of Ukrainian and Russian wheat for shipment in March.
In April, Romania is scheduled to deliver 180,000 tonnes of wheat.
The GASC has agreed to give a cargo stuck in Ukraine more time to be shipped, and has expressed willingness to be flexible about documentation provided by suppliers, according to a trader.
“The situation changes from one hour to the other,” said Ashmawy. “We don’t know what’s going to happen to the vessels, but we do have our negotiations.”
GASC contracts do not contain a force majeure clause, so if a supplier is unable to fulfill a purchase, they must look for another source, but this would be complicated by higher prices and volatile futures, traders said