Ukraine crisis challenges Egypt’s wheat purchases


CAIRO, March 3 (Reuters) – Russia’s invasion of Ukraine has upended Egypt’s wheat import prospects, with two shipments bought by Egypt’s state buyer blocked at Ukrainian ports, d ‘other deliveries threatened and prices on the rise, according to traders.

However, Egypt’s reserves mean it is in no rush to buy as it assesses grain prices outside Ukraine and Russia, the deputy supply minister said in a statement. interview.

Egypt is often the world’s largest wheat importer. Last year, about 50% and 30% of public and private sector imports came from Russia and Ukraine respectively, according to traders.

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Purchases by Egypt’s public buyer, the General Authority for Supply Commodities (GASC), are for heavily subsidized bread available to more than 60 million Egyptians. The government says it intends to reform the program as it tries to limit its import bill, but has not yet announced a plan. Read more

The GASC has canceled two tenders since the Russian invasion. He canceled the first due to a lack of offers, was “testing the waters” to gauge prices with the second and was in no rush to buy, Ibrahim Ashmawy, deputy minister of health, told Reuters. procurement and domestic trade.

For future imports this year, “we will look at the EU because of the proximity, but we will not exclude other exporters like the United States, Kazakhstan, Romania,” he said. .

However, he said Egypt was confident in the existing reserves and the amount of wheat that would become available from the local harvest, which could be enough for nine months.

The government is still discussing with Citibank, as well as other anonymous banks, options for hedging against fluctuations in commodity prices, although Ashmawy said now may not be “the best time to hedge when prices are highly volatile”.

Since the invasion, a cargo of Ukrainian wheat purchased by the GASC for shipment from February 15 to March 3 has been able to leave the port with 42,700 tonnes out of the 60,000 tonnes that had been reserved, according to data from the Egyptian Ministry of Foreign Affairs. Transport.

But two other shipments totaling 120,000 tonnes and purchased in December are stuck at the port, the data shows.

The GASC purchased an additional 300,000 tonnes of Ukrainian and Russian wheat as well as 120,000 tonnes of Romanian wheat for shipment in March.

An additional 180,000 tons of Romanian wheat are reserved for April.

The GASC has agreed to extend the shipping time for at least one shipment stuck in Ukraine and said it would be flexible on the documents provided by suppliers, a trader said.

“The situation is changing hour by hour,” Ashmawy said. “We don’t know what will happen to the ships, but we have our negotiations.”

If a supplier is unable to execute a purchase, they should seek an alternative origin as GASC contracts do not include a force majeure clause, but this would be complicated by higher prices and volatile futures , the traders said.

“Most vendors and traders want to be on hold for 10 days or two weeks to figure out the situation with futures,” one trader said. “It’s very messy right now.”

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Reporting by Sarah El Safty Writing by Aidan Lewis Editing by Bernadette Baum

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