May 27, 2004

Australian AWB Ltd Officials To Visit Egypt To Discuss Wheat Deal
 
Australian AWB Ltd. officials will visit Cairo in June and July discuss an agreement that may see Australia exporting one to two million tons of wheat annually to Egypt in a long-term deal, sources familiar with the situation said Wednesday.
 
The AWB Ltd. officials will visit Egypt on their way to an International Grains Council conference in London as well as on their way back from the conference to meet up with Egyptian officials to discuss the framework of a projected five to seven year deal disclosed earlier this month.
 
"This is just part of the ongoing negotiations and it's not expected that a deal will be sealed before September," said one source.
 
One Egyptian official source said however that the AWB Ltd. officials will visit Cairo in June to see what agricultural products that Egypt can partly offer in exchange for the wheat and will then return again in July to agree on the price of the wheat.
 
The sources said that officials from the main Egyptian state wheat buyer, the General Authority for Supply Commodities, will be among Egyptian officials that the Australians will meet in Cairo.
 
It is understood that Egypt's Supply and Home Trade Minister Hassan Khidr will be giving a keynote speech at the IGC conference in London, one of the sources said.
 
Khidr told a local newspaper earlier this month after returning from Australia that a deal with AWB had already been signed for up to two million tons of Australian wheat over a period of five to seven years and that 25% of its value would be paid for in Egyptian exports.
 
AWB said however that it and the Egyptian government had only agreed on a framework "to explore a number of mutually beneficial opportunities" that could further build on an already long-term relationship.
 
Opportunities cited include a long-term wheat supply contract, possible future investment in silos at Ain Sokhna Port in Egypt, a credit facility for Egyptian purchases and increased fertilizer exports from Egypt, AWB said.
 
Other sources familiar with the negotiations in Cairo said that it was unlikely that any barter deal would be done between the two countries, but rather that Australia was willing to help Egypt export its produce independently of any cash deal.
 
AWB is also expected to build a 150,000-ton-capacity silo on Egypt's Red Sea coast at Ain Sokhna to act as a regional depot for exports to other countries in the region as part of the deal.
 
Egypt has been studying for some time the possibility of acquiring Australian wheat in exchange for Egyptian produce as it has been entertaining similar proposals with Russia and Ukraine in light of the Egyptian state's dwindling foreign exchange reserves.
 
GASC has been the main Egyptian buyer of Australian wheat this marketing year, which began July 1, securing 2.16 million tons through its tender process.
 
Egypt is forecast to import 6.5 million tons of wheat during the 2003-04 marketing year, according to the latest report from the International Grains Council. GASC purchases account for the bulk of Egypt's imports.