Egypt says tensions between biggest wheat exporters are increasing market uncertainty – News

A possible invasion of Ukraine by neighboring Russia could lead to interruptions in the flow of grain out of the Black Sea region



By Reuters

Published: Sun 13 Feb 2022, 17:48

Egypt’s supply minister said tensions between Russia and Ukraine, the two biggest wheat exporters, had increased uncertainty in the market, with the government currently working on several protective measures, according to the report. state news agency MENA.

The government is working to diversify its wheat import origins to preserve its strategic reserves, Supply Minister Ali Moselhy told MENA. He added that studies regarding hedging against rising commodity prices are still ongoing.

“A Finance Ministry committee has been formed to study hedging policies, and discussions will be completed early next month so we can decide whether or not to move forward,” Moselhy said.

Egypt’s strategic wheat reserves currently stand at 5.4 months, he added.

A potential invasion of Ukraine by neighboring Russia could lead to disruptions in the flow of grain out of the Black Sea region, adding upward pressure on prices.

Russia has repeatedly denied that it was planning such an invasion.

Egypt, often the world’s biggest wheat importer, shipped about 50% of its wheat purchases from Russia last year and about 30% from Ukraine, according to data from two regional traders.

Egypt’s state grain buyer, the General Authority for Supply Commodities (GASC), has been working to diversify its wheat supply, recently approving Latvian wheat as a new import origin in November.

The government is also considering an overhaul of its decades-old food subsidy scheme, which provides a daily bread allowance to nearly two-thirds of the population.

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The program is currently costing the government about $5.5 billion, rising wheat prices are expected to add $763 million to the 2021/2022 budget, according to finance ministry data.

Prime Minister Mostafa Madbouly said in December that Egypt was “no longer insulated from global inflationary pressures”, adding that it was time to “revise” the program.