October 6, 2022

 

Wheat stuck in Egypt ports as prices for the commodity spike                     

 

 

Egypt's traders and the nation's cereals chamber said the price of wheat and flour used to make unsubsidized bread has increased in Egypt, as importers struggle to pay for wheat stuck at ports due to a dollar shortage, Reuters reported.

 

According to a letter sent to the supply minister on September 26 by the Federation of Egyptian Industries' Chamber of Cereals, approximately 80% of mills that produce commercially sold bread, pasta, and other goods have "completely ceased activity" because approximately 700,000 tonnes of wheat haven't been released from customs.

 

Hussein Boudy, the chamber's deputy head, said while global wheat prices have decreased to levels seen prior to the Russia-Ukraine war, prices in Egypt have increased as a result of low stock levels.

 

Due to a shortage of dollars brought on by a rising import bill and declining tourism revenues from two of Egypt's biggest markets, Ukraine and Russia, importers are unable to replenish their stocks of wheat. Investors' declining faith in the Egyptian pound also contributed to the shortage.

 

Boudy said wheat prices increased by about 10% in the last two weeks to EGP 9,000 (~US$458.02; EGP 10 = US$0.51) per tonne. However, some traders reported even steeper increases of up to 15%. According to traders, flour increased by 18% to EGP 11,500 (~US$585.24) per tonne.

 

Walid Diab, managing director of the Egyptian Millers Company, said that larger mills used to store for a month and a half or two, but today some mills have stocks for seven to five days.

 

Boudy said that one company had asked to buy from the strategic reserves of the state grain buyer.

 

Egypt's supply minister said that the government will work on the issue of decreasing private sector wheat stocks.

 

The government implemented regulations in March that limited access to dollars for imports as foreign currency reserves were depleting.

 

Despite the fact that wheat and other strategic items were exempt, private sector traders claim that since September, payments for wheat imports have all but ceased and no new contracts have been signed.

 

According to traders, imports of corn, poultry, and soybeans have also been impacted.

 

One local trader said suppliers understand that there is a problem with Egypt, but they now don't want to do new business until the old stocks are released.

 

Only 2,000–3,000 tonnes of wheat have passed through customs since early September, according to the Chamber's letter. The Chamber estimates that the private sector needs about 450,000 tonnes per month, and mills require an immediate release of about 300,000 tonnes.

 

Hesham Soliman, a trader in the private sector based in Cairo, said the shortage of supplies has driven up the price of bread in some bakeries.

 

Attia Hammad of the Cairo Chamber of Commerce said there were no indications of a shortage at bakeries, though he added that some bakeries might increase prices or reduce the weight of loaves due to rising costs.

 

The largest importer of wheat globally is Egypt, which has a population of 104 million. Recently, imports from the private sector surpassed those from the state buyer, which purchases wheat for a sizable bread subsidy programme.

 

-      Reuters

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