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Tuesday, 9 November 2021

Russia hikes wheat prices on high Egyptian demand

Egypt’s wheat binge is putting further pressure on food prices abroad: Prices of Russian wheat notched new highs last week amid increased demand from Egypt, one of its biggest customers and the world’s biggest wheat importer, Reuters reports.

Egypt has been on a buying-spree: State commodities buyer GASC bought 180k tonnes of Russian wheat at an average price of USD 332.30 a tonne last week, only a week after purchasing 360k tonnes from Russia, Romania and Ukraine.

The result: Russian agriculture consultancies have pegged the price of wheat at USD 326-327 per tonne FOB, up USD 2 from the week prior. Prices could still be increasing as Russia’s state export tax is expected to rise again this week to reach USD 69.9 a tonne.

A sharp 180° turn: Just two weeks before its re-entry into the market, Egypt cancelled a tender due to high prices — the fourth time it has done so this year.

GASC’s tenders are delivering the highest prices in at least five years as a multitude of factors — among them low crop yields, higher fertilizer prices and trade tariffs — cause global prices to rise to 10-year highs. The government is preparing to start reducing bread subsidies to soften the impact on the state budget, and is looking to prevent further damage with hedging contracts.

Now, it’s trying to diversify: The Agriculture Ministry yesterday approved a proposal to purchase wheat from Latvia for the first time.

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