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Thursday, 28 June 2018

Government buys less domestic wheat in 2018 than it did last year

Supply Ministry’s domestic wheat purchases fall short of target as 2018 harvest season comes to a close: The Supply Ministry’s domestic wheat buying season ended yesterday with the state having bought 3.15 mn tonnes at a cost of EGP 12 bn, according to a statement. That’s significantly short of the ministry’s short of its initial target of 3.5-4 mn tonnes and is also less than the state purchased last year, Reuters’ Eric Knecht notes. Private sector mills had bought some of the wheat from local farmers at higher prices than the government price, traders tell the newswire. The private millers capitalized on local wheat as a way to reduce their wheat imports, for which they pay in hard currency. The government’s “lower procurement figure means [the General Authority for Supply Commodities] will have to import more wheat from abroad to fill its supply gap.”

That would explain the int’l wheat tenders taking place: The shortfall in the state’s domestic buying offers an explanation as to why the government had been tapping global wheat markets during the domestic harvest season, which the government had always avoided to prevent mixing of subsidized imported wheat and locally harvest wheat. The government has even amended wheat policies of late to encourage traders to bid in global tenders, following the drawn out confusion over zero-tolerance on ergot policy.

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