May 31, 2011

 

Egypt remains cautious over Russian wheat

 

 

Egypt, the world's biggest wheat importer, said on Monday (May 30) that it welcomed the lifting of a Russian grain export ban but would exercise caution in its purchases from the country which had once been its biggest supplier.

 

Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC), said that GASC had sufficient funds to finance wheat purchases in international tenders and that economic problems following an uprising that ousted former President Hosni Mubarak have not affected its budget.

 

Russia, formerly the world's third-largest wheat exporter, plans to lift its grain export ban from July 1, imposed since last August after the worst drought in over a century devastated crops.

 

"Russia will return once again but it will be dealt with cautiously," Nomani said. "We have to make sure they are capable of exporting."

 

"Russia is the closest exporter (in proximity) to the Middle East, so in the landed costs, Russian wheat is the most competitive," he said.

 

Prime Minister Vladimir Putin said on Saturday (May 28) that his government would monitor the situation and ensure domestic farmers were given proper support to cope with the lifting of the ban. He gave no specifics.

 

"Putin said (Russia) will begin exporting and monitor," Nomani said. "Does that mean there could be a new decision to ban its wheat exports?" He added that he was seeking more clarity on the situation. "We do not want to fall into the same problem we fell into last year," he said.

 

Egypt was forced to scramble to replace more than 500,000 tonnes of Russian wheat purchases when Moscow imposed the ban.

 

The uprising that toppled Mubarak and brought the country to an economic standstill in the weeks that followed his ouster in February sparked trader speculation that GASC's financing had been cut off, but Nomani said GASC had no budgetary concerns.

 

"This issue will not impact previous budgets and the financing needed, especially for subsidised or strategic commodities," he said.

 

"We have no financing problems," Nomani said. "When I ask for financing, it is provided. There are no problems in my budget."

 

Nomani said earlier this month that he expected the state budget for the fiscal year 2011-12, starting in July, would include a bigger food purchasing bill than in 2010-11, in light of rising global food prices.

 

Egypt, the Arab world's most populous country, subsidises key staples including wheat, sugar, rice and vegetable oils, ensuring domestic prices are affordable for the population. About 63 million Egyptians benefit from food subsidies.

 

Egypt's last wheat purchase in an international tender was on February 23. Since July 1 last year, GASC has purchased about 5.22 million tonnes of French, US, Canadian, Australian, and Argentine wheat.

 

GASC said earlier this month it had wheat stocks from abroad to last for about four months. Egypt's local harvest purchase season starts in mid-April and ends in mid-July, and GASC said it eyed local purchases of up to four million tonnes, which is enough for another five months.