As Ukraine crisis heats up, Egypt fears for wheat supply

Egypt is intently following up the continued tensions alongside the border between Russia and Ukraine, amid issues over the availability of wheat to the Egyptian market.

Moscow has been amassing 1000’s of troops close to the border with the previous Soviet republic, triggering fears of a attainable Russian invasion. Russia opposes Ukraine’s accession to NATO and needs safety ensures from the West that Kyiv is not going to be part of the alliance, a request rejected by the US.

The Ukrainian disaster was a important matter of debate between Egyptian Overseas Minister Sameh Shoukry and his US counterpart Antony Blinken throughout a cellphone name Jan. 27.

The Egyptian Overseas Ministry mentioned talks between the 2 chief diplomats dwelt on varied points of bilateral relations between Egypt and the US, together with exchanging views and coordination about plenty of regional points.

An announcement by the US Division of State mentioned Blinken and Shoukry exchanged views on latest developments concerning Ukraine, and problems with regional and bilateral concern.

Russia and Ukraine are main gamers of the worldwide grains market, with their wheat exports accounting for 23% of worldwide commerce in 2021-22, in keeping with the US Division of Agriculture.

Consultants warn that the Ukrainian disaster will drive up world wheat costs, which can add extra monetary burdens on Egypt, the world’s largest wheat importer.

In 2020, Egypt imported about 12.9 million tons of wheat at a value of $3.2 billion, in keeping with the state statistics company CAPMAS.

“Till now, there is no such thing as a impression on wheat imports from Ukraine and Russia to Egypt,” Hussein Abo Saddam, head of the Egyptian Farmers Union, instructed Al-Monitor over the cellphone. “But when the disaster continues to escalate it would negatively have an effect on Egypt, particularly as each Russia and Ukraine are the nation’s largest wheat suppliers.”

Wheat exports from each Russia and Ukraine cowl virtually 85% of Egypt’s wheat demand. In 2020, Egypt was the most important shopper of Ukrainian wheat, importing greater than 3 million tons, virtually 14% of Ukraine’s whole wheat manufacturing. Egypt additionally purchased 8.9 million tons of wheat from Russia in 2020.

Egypt’s wheat consumption for 2021-22 is forecast to achieve 21.3 million tons, up by virtually 2.4% from 2020-21, in keeping with the US Overseas Agricultural Service.

Abo Saddam mentioned that Egypt is not going to really feel the warmth of the Ukrainian disaster within the close to future because the nation prepares to reap its wheat manufacturing this April.

“The native harvest gives Egypt with round 9 million tons of wheat, which accounts for nearly half of the nation’s wheat wants,” he famous.

The Russian-Ukrainian stress has already despatched up world wheat costs, going up by 7% on the Chicago Mercantile Change during the last two weeks. In Europe, wheat futures rose virtually 6%.

“The Egyptian authorities was compelled to extend the value of wheat for native farmers by 95 Egyptian kilos [$6] per bushel as a result of rising world wheat costs,” Abo Saddam mentioned.

On Jan. 25, Egyptian Finance Minister Mohamed Maait mentioned the nation’s public treasury incurred about 12 billion kilos ($762.3 million) in extra allocations to buy wheat as a result of spike in world wheat costs.

However Ahmed Sheha, former head of the Importers Part on the Cairo Chamber of Commerce, downplayed worries about wheat provide to Egypt.

Sheha instructed Al-Monitor over the cellphone that Egypt’s inventory of wheat and different strategic commodities is ample for as much as six months, which can assist include any impression from the Russian-Ukrainian disaster on Egypt’s wheat provide.

“I don’t assume there might be any impact on Egypt’s wheat imports from each Ukraine and Russia at current. Imports from Ukraine are nonetheless flowing into Egypt as typical and every day with none disruptions,” he mentioned.

Final week, the Ministry of Provide and Inner Commerce eased issues about any disruption of wheat provides to Egypt, saying the nation’s wheat inventory is sufficient for greater than 5.2 months.

The ministry mentioned it’s doing the whole lot attainable to safe Egypt’s wheat wants both by native farmers or by imports through worldwide tenders.

Egypt at present has greater than 410 public, public/non-public and personal sector mills. Public mills and public/non-public mills produce 82% extraction flour, which is used for making the sponsored bread.

Sheha mentioned Egypt nonetheless can flip to India and Brazil and different wheat-producing nations to purchase wheat in case the scenario escalates right into a army battle between Russia and Ukraine.

Final month, the Common Authority for Provide Commodities (GASC), Egypt’s important wheat shopping for company, mentioned it seeks to purchase 55,000-60,000 tons of milling wheat for cargo in February and March.

GASC Vice Chairman Ahmed Youssef mentioned that the company was working to purchase cargoes of milling wheat from Argentina, Australia, Bulgaria, France, Germany, Hungary, Kazakhstan, Latvia, Paraguay, Poland, Romania, Russia, Serbia and Ukraine.