Egypt may add Argentina as wheat supplier

Sherine El Madany
7 Min Read

CAIRO: Egypt may resume wheat imports from Argentina after a hiatus of several years to help compensate for Russia’s ban on exports, Trade Minister Rachid Mohamed Rachid said on Tuesday.

A severe drought has sharply reduced grain production throughout the Black Sea region and prompted Russia, the region’s top exporter, to ban grain shipments until at least the end of the year.

In an interview with Reuters, Rachid said Egypt still aimed to import 6 million tons of wheat in 2010-2011 and was well on the way to replacing all the Russian wheat it had agreed to buy before the ban.

Egypt is the world’s largest wheat importer, and Russia was the supplier of choice in most of its foreign wheat tenders in the past year.

Asked if Egypt was considering new origins for wheat beside the United States, France and Canada, Rachid told Reuters: "There are seven or eight wheat suppliers globally. Argentina is one of them …it’s a big supplier."

He said he had held talks with Argentine government and private sector officials two weeks ago during a visit to sign a free trade agreement with Mercosur countries.

"We’re happy to see Argentina added to our list of suppliers," he said, adding that imports could begin "with the next crop."

In the fiscal year to June 30, 2010, Egypt’s main wheat buying agency GASC bought 5.53 million tons of US, French, Russian, German, Kazakh and Canadian wheat at international tenders.

Some 63 percent of its wheat came from the Black Sea region.

"We are serious about keeping our diversification of sources," said Rachid. "That’s the way to do it."

Rachid said Russia’s government had agreed to examine ways to reschedule supplies from October 1 but would not be in a position to take any decision on shipments before then.

"Of course the ban is on until the end of December. But (Russia) made it clear that for us, after October 1, they will give us an assessment of what they could or could not do, because by that time they will have the best estimate of their production and quantities, which they don’t have at the moment."

Rachid said Egypt would allow more than one shipment port for its wheat suppliers "if we feel that such change of conditions will make supply easier without posing risks."

He said, "We do not have at the moment any specific needs to change our regulations" regarding changing shipment terms for wheat traders.

A decision on whether to allow wheat suppliers to use more than one shipment port would be implemented "very soon, possibly starting with the next tender", he added.

Ukraine, Egypt

Ukraine will halve its 2010 grain exports, adding pressure to markets already grappling with Russia’s drought-induced grain export ban, while Egypt is set to import.

Egypt, which had previously depended on Black Sea supply for some 63 percent of its imports, says it has already replaced most of the wheat it was unable to buy after Russia’s ban and is spreading the net wider to find other supplies.

Ukraine, the world’s largest exporter of barley and sixth-largest of wheat, plans to limit grain exports to 2.5 million tons for the remainder of the year, Agriculture Minister Mykola Prysyazhnyuk was quoted as saying. A final decision will be taken on Wednesday.

"Grain traders were on their knees saying: ‘Save us and give us force majeure’," Interfax quoted Deputy Prime Minister Viktor Slauta as saying on Tuesday.

An industry source had told Reuters earlier Ukraine would also limit wheat and barley exports 2.5 million tons in the rest of the marketing season from January to June next year.

"This volume (of quotas) will be considered by the government (at the Aug. 18 meeting)," said the source at a Western grain trading company who asked not to be named.

Worries about damage caused to wheat in the Black Sea region, which has emerged as a key exporter to global markets, pushed benchmark US wheat to a near two-year high recently, even though the outlook for crop problems into 2011 is tempered by ample stockpiles.

The Black Sea region includes three of the world’s top ten wheat exporters and has been a well used source for several of the world’s most reliant importers including top buyer Egypt.

Drought in North Africa has also slashed harvest forecasts in that importing region. Tunisia’s harvest was forecast at 1.1 million tons, half last year’s level, the state news agency reported.

Algeria’s state grains agency put the country’s 2010 harvest below last year’s 6.1 million tons, though stocks of durum wheat and barley were sufficient to avert imports.

Hot speculation has surrounded the possible strategies to be taken by Egypt, due to its regular large forays into international markets.

Traders had told Reuters earlier that Russia was not expected to honour export deals agreed before but for delivery after Aug.15, the date it halted shipments of grain abroad.

But Trade Minister Rachid Mohamed Rachid said the country was well down the road to covering recent deals.

"We have already replaced most of the quantities that were contracted with Russia… Egypt is continuously in the market," Rachid said.

Egypt has purchased 360,000 tons of French wheat since Russia’s export ban was announced. It needs to replace more than 500,000 tons of Russian wheat purchases affected by the ban.

On Tuesday it bought 55,000 tons of US wheat from Cargill in a tender that excluded both Russia and Ukraine in favor of North American and European suppliers.

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