Egypt secures 430,000  Russian wheat in private deal

EGYPT — Egypt’s General Authority for Supply Commodities (GASC) has made private deal to secure 430,000 metric tons of Russian wheat, bypassing the traditional tender process, sources familiar with the matter has revealed.

The wheat, slated for October shipment, was purchased from Russian grain trader United Grain Company (OZK) via an intermediary firm.

The price for the wheat was reported at US$233 per metric ton, with some sources indicating that the intermediary had initially acquired the grain at US$231 per metric ton. It remains unclear if these prices include shipping costs.

This private deal comes as Egypt continues to navigate a challenging economic landscape marked by high inflation and a pressing need to secure affordable grain.

As the world’s largest wheat importer, Egypt relies heavily on imports to support its subsidized bread program, which is crucial for tens of millions of Egyptians.

In August, Egyptian President Abdel Fattah al-Sisi personally intervened to instruct GASC on its largest-ever tender, aiming to procure more than half of the organization’s wheat needs in one go.

Despite this ambitious approach, GASC managed to secure only 7% of its target due to higher-than-expected prices.

Recent reports have highlighted that GASC is in negotiations to acquire up to 1.8 million tons of wheat from various suppliers, including Russia, to address the country’s needs. This effort is part of Egypt’s broader strategy to manage its grain supply amid ongoing economic challenges.

Egypt’s struggle with inflation has been compounded by a foreign currency shortage, prompting the country to seek support from the International Monetary Fund and Gulf allies.

In response to these economic pressures, Egypt has implemented austerity measures, including a recent increase in the price of subsidized bread.

Supply Minister Sherif Farouk remains optimistic, stating earlier this month that Egypt is confident in achieving its target of around 3.8 million tons of wheat by the end of 2024. This goal will be pursued through a mix of tenders, direct purchases, and government-to-government agreements.

Meanwhile, Egypt is set to boost its grain and cereal storage capacity by 76%, aiming to reach 6 million tons by 2030, according to Walid Abu Al-Magd, the Deputy Minister of Supply.

Speaking to Asharq Business, Abu Al-Magd outlined a strategic two-phase plan designed to extend the storage duration of essential goods from six to nine months.

The first phase, to be completed by 2027, will involve constructing new silos with a capacity of 1.4 million tons, costing EGP 19 billion (US$ 615 million).

This expansion is part of Egypt’s efforts to ensure food security amidst fluctuating global grain markets and supply chain disruptions. The second phase, slated for completion by 2030, targets an additional 1.2 million tons of storage capacity, requiring an investment of EGP 15 billion (around US$ 485 million).

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