January 8, 2013

Egypt had bought enough wheat supplies from local and international sources to last until June 17, which means it can cut its annual wheat import target by around one million tonnes.

Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC), said he expected wheat imports this fiscal year to drop to 3.8 million tonnes from an earlier estimate of 4.8 million, but added that GASC would continue to monitor the international market for competitive prices.

"I have enough supplies till June 17 from local and international markets. I can get an additional 5.5 months' supply from the local market if I get four million tonnes. This would mean I'm covered for 11 months," he said.

"Egypt is in a good, actually excellent, situation. The wheat available inside Egypt plus that which will be harvested can give me a bigger and better chance to maintain supplies," Nomani said regarding the country's stocks.

Since 2011, GASC has consistently maintained stocks of at least 6-7 months' supply of wheat. A forecast of 11 months' supply is higher than usual.

Traders said the larger Egyptian wheat crop meant a fall in wheat imports had been expected this season. With wheat prices high in historic terms, Egypt was likely to import less in the current 2012-13 season but still face a larger import bill. This price pressure means Egypt will no doubt use every grain it can produce locally to cut its import bill. It may now have enough supplies to sit and wait for the lowest possible prices, which could be bearish for markets," a German trader said.

"They will return to the market when prices will suit them better," a French trader said, adding GASC still needed between 500,000 and 600,000 tonnes of wheat before the next crop.

In fiscal year 2011-12, which finished end-June, GASC bought 7.93 million tonnes of wheat, of which 5.33 million were from the international market and 2.6 million from the local market.

Nomani said he expected to buy a total of 7.93 million tonnes this fiscal year too, but with more quantities from the local market due to price incentives offered to farmers and the agricultural ministry's introduction of new high-quality seeds.

GASC has so far bought a total of 6.84 million tonnes of wheat this fiscal year. Of those, 3.14 million tonnes of wheat were from international markets and 3.7 million from the local market, Nomani said.