Are cuts to the bread subsidy system still a red line for the Ismail government? That’s the opinion hinted at by a number of traders speaking to Reuters, who note that Egypt is ratcheting up its wheat purchases on the global market at a more aggressive pace to keep up with rising consumption rates. The General Authority for Supply Commodities has purchased nearly 1 mn tonnes of wheat over the past two weeks, over 20% more than what it bought all of last year. More recently, Egypt purchased 420k tonnes of wheat from Russia, Ukraine, and France on Thursday, at an average price of USD 209.54 per tonne, according to BlackSeaGrain. Traders noted that consumption in Egypt increased from 700K tonnes to 900K tonnes since the EGP float in November as costs of other staples were allowed to increase. This, coupled with how fast the government backtracked on a minor attempt to reform the bread subsidies system after protests, suggests that conventional wisdom on bread subsidies still prevails.

These purchases, however, could also improve Egypt’s already-commanding positionon the international market. CNS Canada is noting that Egypt’s rejection of three wheat shipments from Russia and Argentina over quality of the grain — coming from a need to ensure that all FX spent on wheat is worth it — is driving speculation in the market. Other elements in the global market to look out for is Turkey suspending licenses for Russian wheat imports. Sputnik notes that Turkey is one of Russia’s three main wheat export customers, and this suspension raises the latter’s dependence on Egyptian purchases.