September 21, 2011

Egypt to import more wheat to avoid unrest

Egypt plans to boost wheat imports this year to build domestic stockpiles and ensure it does not get affected by political unrest, according to the nation's Agricultural Export Council.

Overseas purchases may rise to 10.5 million tonnes in the year starting July 1 from 9.8 million tonnes a year earlier, Hisham El Attal, board member of the council, said in an interview according to a Bloomberg report.

El Attal's import forecast is higher than the 10 million tonnes estimated by the USDA on September 12 and may help limit a 14% slide in wheat futures this year. December delivery wheat gained 0.9% to US$6.8 a bushel.

Egypt will take advantage of the slump in prices to rebuild stockpiles and enable the government to immediately supply the market in case of any unrest, he said.

Protests toppled leaders in North African nations of Egypt and Tunisia while riots erupted from Bahrain to Morocco this year, in part because of high food prices.

Food price inflation concerns for policy makers are set to persist even as rice declines and wheat trades below this year's peak, according to the United Nations, which said that importers are still paying more than a year ago.

Another year of bumper wheat and rice harvests, as well as a continued surplus in corn, is needed to bring stockpiles back to "healthy" levels and reduce inflation concerns, Abdolreza Abbassian, senior economist at the UN Food & Agriculture Organisation, said.

China, the largest consumer, may also boost purchases of wheat to 1.5 million tonnes in 2011-12, from 1.3 million tonnes a year earlier, as millers seek high-grade variety to blend with local supply, Haiguang Shi, vice president of the Canadian Wheat Board.