Egypt back in talks for major Russian wheat imports

EGYPT- Egypt, one of Africa’s major wheat consumers, is currently in talks to acquire 1 million metric tons of wheat from the Russian government, according to undisclosed sources reported by Bloomberg. 

Egypt stands as one of the leading global wheat importers, while Russia holds the top position as the world’s wheat exporter, a position it has solidified through consecutive abundant harvests and a reduction in wheat exports from Ukraine following its invasion of the country 20 months ago.

For the 2022-2023 marketing year, Russia is projected to produce 92 million metric tons of wheat and export 46 million metric tons, as per the World Agricultural Supply and Demand Estimates report by the US Department of Agriculture in September.

Recent reports by Bloomberg indicated that Egypt was planning to procure nearly 500,000 metric tons of wheat from France and Bulgaria after a deal with Russia was obstructed by the Russian government due to pricing objections. 

This marks the second instance in recent months where the acquisition of Russian wheat by the General Authority for Supply Commodities (GASC), Egypt’s state-run grain buyer, faced disruption due to Moscow’s efforts to enforce an unofficial price floor for its substantial crop.

Bloomberg stated that the Russian government did not respond to their request for comment, and the GASC declined to comment on the situation. 

Since the upheaval caused by Russia’s invasion of Ukraine last year, leading to disruptions in global wheat markets, Egypt has shifted towards direct purchases, rather than tenders, to secure more favorable prices.

The conflict between Russia and Ukraine, both significant wheat suppliers to Egypt, has resulted in price fluctuations and alterations in global trade patterns. 

Prior to the conflict, 60% of Egypt’s wheat imports were sourced from Russia and 22% from Ukraine, as outlined in a recent report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.

The FAS report also noted a 73% decrease in Egypt’s wheat imports from Ukraine in 2022. For the current marketing year (2023-24), the FAS predicts Egypt’s wheat imports to reach 10.8 million metric tons, a 3% increase from the previous year’s 10.15 million metric tons—the second-lowest total in the past decade. 

This decline in imports is attributed to the economic repercussions of the conflict in Ukraine, leading to persistent foreign currency challenges and disruptions in Egypt’s wheat trade.

In response to the altered trade landscape, Egypt has diversified its wheat suppliers. Earlier this year, the GASC purchased 500,000 metric tons of wheat from India. 

Additionally, last month, the Egyptian government inked a US$500 million deal with a private company, Al Dhara, from the United Arab Emirates, along with the Abu Dhabi Exports Office, for a five-year supply of wheat.