The decision came after Russia halted supplying wheat, objecting to the pricing of a mega-deal as the authorities in Moscow seek to impose an unofficial minimum price on grain deals.
Egypt has one of the highest per capita consumption of wheat in the world. However, the country’s imports have been affected by the Russo-Ukrainian war especially after the Black Sea Grain Initiative came to an end.
The country has also been suffering a foreign currency crunch, especially after the Ukraine war delivered a broad shock to its economy as a result of price volatility.
Egypt’s currency has tumbled by about 50% against the dollar and official headline inflation has soared to an all-time high of 36.5%.
As a result, the country started deferring payments for wheat imports and has been facing an increasingly difficult task of raising cash for foreign debt repayments.
It’s the second time in the past few months that the purchase of Russian wheat by Egypt’s state-run buyer has been thrown into turmoil as authorities in Moscow try to enforce an unofficial price floor.
In August, UAE-based agribusiness Al Dahra and the Abu Dhabi Exports Office (ADEX), the export financing arm of the state-owned Abu Dhabi Fund for Development, signed a US$500 million deal to supply Egypt with wheat.
The five-year agreement, worth US$100 million per year, aimed at providing Egypt with imported milling wheat “at competitive prices”.
According to a recent report by Reuters, many recent wheat purchases have been made with loans from the International Islamic Trade Finance Corporation (ITFC), which last year doubled a credit facility extended to Egypt to US$6 billion, and from the World Bank, which funded wheat imports earlier this year.
However, the Egyptian government said on Sunday 18 that its strategic reserves of wheat were sufficient for five months of local consumption.
The announcement was made after the Ministry of Supply and Internal Trade said that it had purchased 3.8 million tons of wheat from local farmers during this year’s harvest season.