November 23, 2010

Egypt's wheat demand drives up global prices

Wheat futures gained Monday (Nov 22), as Egypt - a major wheat importer that heavily subsidises the grain for its poorer population - is likely to import from the US a significant portion of its stocks.

With Russia's continued grain embargo putting pressure on commodities markets around the world and pushing up grain futures, Egypt has had to turn to new sources. Farmers in the US will play a key role in supplying Egypt, "because they've essentially run out of other sources," said Mike Zuzolo, the president of Global Commodity Analytics & Consulting.

On the Chicago Mercantile Exchange, wheat futures for December delivery rose US$0.04 to US$6.48 1/2 per bushel. December corn futures slipped US$0.04 1/4 to US$5.16 1/2 per bushel, and soy futures for delivery in January 2011 climbed US$0.13 1/2 to US$12.15 per bushel.

The changing role of US exports in the Egyptian grain market is evident in the numbers compiled by a news service; in the year ending on May 31, Egypt was the 14th-largest importer of US wheat, but as of November 11, it ranked third behind Nigeria and Japan.