Egypt seeks to broaden wheat import sources as Russian grain prices climb

CAIRO- Egypt, the world’s biggest wheat importer, is stepping up efforts to find more sources after prices it paid for Russian grain climbed almost 5 percent in less than a month.

The state-run General Authority for Supply Commodities bought Russian wheat for as little as $243.50 a metric ton on July 7, its first purchase following the expiration of a ban on grain exports from the eastern European country after almost a year. The authority paid as much as $255.25 at its latest tender on July 29.

“The price of Russian wheat has been going up gradually, tender after tender,” Vice Chairman Nomani Nomani said by phone from Cairo yesterday. “So we are now urging other source countries to increase the competition and decrease their prices, and we are also seeking to expand our list of approved import sources.”

The authority is still considering restoring Romania and Ukraine to a list of approved sources that now spans nations including the U.S., France and Australia, Nomani said. Russia accounted for more than half of Egypt’s wheat imports before it barred all outbound cereal shipments on Aug. 15.

“What is helping boost Russian wheat prices is that it’s cheaper than others, and there is a lot of demand for it,” Nomani said. “But we want to diversify origins to prompt competition and prevent monopoly, in order to get the best quality for the best prices.”

Subsidized Bread

The authority buys 5 million to 6 million tons of wheat a year on behalf of Egypt’s government through international tenders because local production is insufficient to meet demand. The wheat is used to make subsidized bread.

Russian wheat is selling at a discount to other nations’ grain of as much as $50 a ton, the most in at least four years, according to the Moscow-based Institute for Agricultural Market Studies. Russian wheat normally costs $10 to $15 a ton less than French grain, says the researcher, also known as IKAR.

“Russian traders have cornered themselves on prices,” IKAR analyst Oleg Sukhanov said by phone July 29. “Traders competed with each other, trying to sell as much as possible. The only competition Russia has now is with Russia itself. The price should be about $300 a ton, based on supply and demand picture.”