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Sunday, 29 May 2022

We’ve bagged half of our targeted local wheat purchases for the season

The Madbouly government has purchased 3 mn tons of local wheat since the start of the harvest season, bringing it halfway to its 6 mn-ton target, according to a cabinet statement on Thursday. The government upped its target for domestic wheat purchases by some 70% last year, having decided to focus on the local harvest — which runs through the end of August — after war in Ukraine sent prices spiraling on the international market.

The carrots and sticks are doing the trick: The government raised local wheat prices by 22% as part of a raft of measures to incentivize farmers to increase production. It also introduced a minimum selling quota to the state and tightened restrictions on sales to non-state actors.

The state had been expecting 75% of domestic grain to be harvested by the end of May, with the remainder set to be harvested in June.

Egypt now has enough wheat to last until January 2023, Supply Minister Ali El Moselhy said on Thursday. The country had four months worth of grain in reserve nearly two weeks ago.

Remember: We don’t necessarily have all of this wheat. Egypt’s reserves figure includes purchases rather than just fulfilled deliveries, according to commodity traders.

ON THE IMPORT FRONT-

Could the gov’t loosen wheat quality rules as it seeks to diversify supply: Egypt will allow wheat imports with a moisture content of up to 14% — up from 13.5% — for a year due to supply restrictions in the global market, according to a Trade Ministry document seen by Reuters.

The move could widen our grain supplier pool: “Most of the EU, especially Poland and Baltic wheat, have 14% moisture level in their contracts. That’s why they were not usually offered in tenders,” one trader told the newswire. The government has redoubled efforts to buy wheat from new suppliers following the loss of grain from Ukraine, which before the war was a key supplier to Egypt.

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