EGYPT – Egypt has raised the price of local wheat procurement for the new harvest season, which starts in April 2023, by 42 percent to hit EGP 1,250 (US$23.3) per ardeb (1 ardeb= 150kg), up from EGP 880 (US$16.4)
Egypt relies heavily on wheat for making bread, a main staple in the Egyptian diet, with citizens consuming almost 100 billion loaves of bread annually.
However, since the outbreak of the Russian-Ukrainian crisis, the country of more than 100 people has been suffering from a wheat shortage which forced it to diversify its major import supply to include Romania.
The government of Egypt has continued to encourage local production to achieve self-sufficiency. In doing so, the government has raised the procurement price as a step that “reflects the state’s keenness to support farmers and encourage them to cultivate and supply wheat to the state.”
According to Mostafa Madbouly, Egypt’s Prime Minister, the country continues to bear the pressing cost of wheat subsidies which is estimated to reach EGP 95 billion (US$1.8B) by the end of the year, up from EGP 38 billion (US$708M).
Apparently, for the Ethiopian government, the raise in local wheat procurement is part of President Abdel-Fattah El-Sisi’s directives to provide a rewarding price for the wheat supply this season.
As a way to support farmers, Trade Ali Moselhi, Minister of Supply and Internal has announced that the state is strategizing on buying four million tones of local wheat during the upcoming harvest season as the country push towards self-sufficiency.
Global wheat prices dip
Meanwhile, this is happening at a time when the global wheat market is experiencing a real lull according to the futures contract for Soft Red Winter Wheat, the American benchmark variety listed in Chicago.
The report shows that the Soft Red Winter Wheat registered a decline to US$7.3 per bushel (about 27 kg), its lowest level since September 2021.
Wheat production in 2022/2023 is expected to increase according to the United States Department of Agriculture (USDA) global forecasts.
In Australia, wheat yield is expected to hit 36.6 million tonnes while Russia could record a stock of 91 million tonnes against 75 million tonnes last year.
This decline in world prices can be attributed to the sluggish demand against a background of global economic slowdown which, according to observers, should not allow the abundance of supply expected on the markets in the coming months to be absorbed in the short term.