February 1, 2011

Egypt may increase wheat imports

Egypt, one of the world's largest wheat importer, may purchase additional grains from major worldwide suppliers like US and Australia to control escalating food price inflation.

This is according to trade sources and analysts on Monday (Jan 31).

Egyptian protesters were camped out in central Cairo yesterday and have vowed to stay until they topple President Hosni Mubarak.

"Egyptian authorities may react to concerns about food price inflation by indeed increasing their purchases from the rest of the world to increase their domestic stockpiles," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia.

US wheat futures bounced back almost 1% in Asian trade on Monday after tumbling more than 2% on Friday (Jan 28) as the unrest in Egypt prompted concerns about grain shipments to the north African country.

"The immediate short-term impact will be on trade flows and rising shipping insurance costs for that part of the world," said Brett Cooper, senior manager markets at FCStone Australia.

"Longer-term when governments are under pressure in emerging markets they will make sure that people's stomachs aren't empty," he said.

Algeria has already ordered a speeding up of grain imports to head off potential unrest over food prices, according to a government source.

Egypt bought around 540,500 tonnes of Australia's wheat in the marketing year to September last year.

"Aussie wheat is very competitive on a landed basis (in Egypt) and I would expect more business being done over the next six months," a Melbourne-based grain trader said.