Egypt has launched its largest wheat purchase ever amid food security concerns raised by an intelligence briefing to President Abdel Fattah al-Sisi, Reuters reported, citing three security and government sources.
The tender is about 20 times larger than usual, and Egypt, the world’s largest wheat importer, relies on the grain to provide subsidized bread to tens of millions of citizens.
In a related context, Egyptian Prime Minister Mostafa Madbouly said today that the country’s strategic reserve of wheat is currently sufficient for consumption for a period exceeding 6 months, but the government may move to buy more when prices decline.
Targeted import
Egypt’s Minister of Supply, Sherif Farouk, said this month that Egypt remains confident of achieving its goal of importing about 3.8 million tons of wheat by the end of this year through a package of practices, direct purchases and government agreements.
Farouk added that Egypt still has a “green light” to enter into direct talks to get the best price, adding that Egypt should be given specific advantages when importing wheat, both in terms of payment terms and preferential prices, due to the importance of its wheat purchases.
Egypt’s state grain buyer, the General Authority for Supply Commodities, launched a tender on Aug. 6 that traders said was the largest ever by the world’s largest wheat importer.
Egypt said on August 12 that it had bought only 280,000 tonnes of wheat, far short of its target.
Traders linked this to the rise in prices due to long delays in payment, and said that the General Authority for Supply Commodities has since entered into informal talks with suppliers.
Ongoing conversations
“We are in continuous talks with all parties to import wheat at the best price, whether traders, governments, or even farmers’ associations and unions in some countries,” Hossam Al-Jarrahi, the authority’s deputy chairman, told reporters.
Traders estimate that the authority is seeking to buy up to 1.8 million tonnes of wheat from sources including Russia at a price of about $248 per ton, on a free-on-board basis, with payment to be made via 270-day letters of credit.
Farouk said that Egypt is confident in its ability to buy wheat at reduced prices from the two largest wheat exporting countries, thanks to balanced foreign relations.
Farouk did not specify these two countries, but Russia and the European Union are among Egypt’s main suppliers. Farouk also indicated that Egypt is studying the possibility of adding Turkey to the list of new countries from which it imports wheat, after Algeria recently purchased a huge shipment from Ankara.
He said that Egypt’s wheat reserves are sufficient to cover the country’s needs for more than 6 months, noting that the ministry aims, however, to increase reserves for more than 9 months due to potential geopolitical tensions.
Farouk added that Egypt always seeks to have reserves of all strategic commodities sufficient for more than 6 months.
Farouk pointed out that the General Authority for Supply Commodities can obtain loans to purchase wheat through immediate payment or payment upon sight, but it is still seeking better payment terms.
