Egypt has ample wheat stocks ample, cuts import target

CAIRO: Egypt’s state wheat buyer said it had bought enough supplies from local and international sources to last until June 17, while higher local wheat supplies mean that it can cut its annual wheat import target by around a million tons.
Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC), said he expected wheat imports this fiscal year to drop to 3.8 million tons from an earlier estimate of 4.8 million, but added that GASC would continue to monitor the international market for competitive prices.
“I have enough supplies till June 17 from local and international markets. I can get an additional 5.5 months’ supply from the local market if I get 4 million tons. This would mean I’m covered for 11 months,” he said.
“Egypt is in a good, actually excellent, situation. The wheat available inside Egypt plus that which will be harvested can give me a bigger and better chance to maintain supplies,” Nomani said regarding the country’s stocks.
Since 2011, GASC has consistently maintained stocks of at least 6-7 months supply of wheat. A forecast of 11 months supply is higher than usual.
Traders said the larger Egyptian wheat crop meant a fall in wheat imports had been expected this season. With wheat prices high in historic terms, Egypt was likely to import less in the current 2012/2013 season but still face a larger import bill.
“This price pressure means Egypt will no doubt use every grain it can produce locally to cut its import bill. (It) may now have enough supplies to sit and wait for the lowest possible prices, which could be bearish for markets,” a German trader said.
“But I would not be surprised to see more import tenders despite the statement if global prices fall,” the trader added.
“They will return to the market when prices will suit them better,” a French trader said, adding GASC still needed between 500,000 and 600,000 tons of wheat before the next crop.
In fiscal year 2011-12, which finished end-June, GASC bought 7.93 million tons of wheat, of which 5.33 million were from the international market and 2.6 million from the local market.
Nomani said he expected to buy a total of 7.93 million tons this fiscal year too, but with more quantities from the local market due to price incentives offered to farmers and the agricultural ministry’s introduction of new high-quality seeds.
GASC has so far bought a total of 6.84 million tons of wheat this fiscal year. Of those, 3.14 million tons of wheat were from international markets and 3.7 million from the local market, Nomani said.
“GASC is still monitoring international markets and supplying needs of imported wheats and oils. When prices are suitable, GASC will get the imported amounts that supplement local commodities,” Nomani said.
The Central Bank, which had only allowed the Egyptian pound to fall by 6 percent since Egypt’s popular uprising almost two years ago, has let it fall about another 3.5 percent this week.
Political uncertainty has continued to derail the economy since the protests that toppled former president Hosni Mubarak in February 2011. The currency slide has raised concerns that Egypt, the world’s biggest wheat importer, may find it harder to maintain its massive food imports.
The nation’s bakeries churn out subsidized saucer-sized flat loaves selling for just 5 piastres (less than 1 US cent), a staple for many Egyptian families struggling to make ends meet in the nation of 83 million people.
But Nomani said his forecast drop in wheat imports this fiscal year is due to rising local wheat supplies, not the slide in the Egyptian pound.
“GASC is the biggest demander of foreign currency. When I boost dependence on the local market, meaning payment in Egyptian pounds, then I decrease my demand for dollars in the future,” Nomani said.
He said Egypt was committed to supplying subsidized food to Egyptians and would bear all cost differences in the price of imported wheat.
“If the prices are going to rise, the state will bear the costs,” Nomani said, adding that GASC’s budget would be amended “soon” to accommodate for the currency slide.
Egypt harvested 8.69 million tons of wheat in summer 2012, up 4 percent from the 8.37 million tons in 2011, according to the UN’s Food and Agriculture Organization.
This was well up from the 2007-2011 average crop of 7.88 million tons on good weather, due to better seeds and attractive Egyptian government procurement prices, traders said.
Global wheat prices rose 18.6 percent in 2012 as drought damaged crops in areas including the US, Russia and Ukraine.