Already one of the world’s leading wheat importers, it’s no surprise that Egypt is one of the main drivers of news and price movements for the global commodity market. 

But the latest geopolitical changes and the growing Egyptian population have made officials think more about increasing self-sufficiency and food security in a move that will have further consequences for the wider trade. Currently, Egypt consumes about 20 million mt of wheat annually and imports up to 11 million mt of that figure, with the spiraling price of wheat and other agricultural commodities causing major issues for any nation reliant on imports. 

Egypt has managed to build and secure a largely stable wheat supply from a range of diverse options, all to support its state bread subsidy program and feed its people, buying via international tenders or by making direct wheat purchases from different origins.

 

In this article, Fastmarkets analyzes some of the latest trends for the Egyptian wheat market and its prospects as we move into the start of the new grain season, with Egyptian farmers just starting to harvest their 2023 wheat crop. 

Egypt has held the number one place in the global ranking of the world’s biggest wheat importers for many years. Egypt’s wheat imports in the 2023/24 marketing year are expected to reach 10.8 million mt,  2 % down from the 2022/23 marketing year imports, the USDA’s Foreign Agricultural Service (FAS) said in its latest report.

In the current season, which runs from July 2022 to June 2023, Egyptian wheat imports were expected to reach 11 million mt, the second lowest figure in the ten years since 2013/14 when imports fell to 10.15 million mt, according to USDA data. 

However, trade sources spoken to by Fastmarkets believe wheat imports in the upcoming season could increase more sharply and reach up to 12 million mt, with growing population the main driver of the increasing wheat demand. 

Egypt’s population currently numbers more than 104 million people, and according to the Egyptian government’s Central Agency for Public Mobilization and Statistics (CAPMAS) it is expected to reach 124 million people by 2030. For the upcoming 2023/24 marketing year, the USDA has forecast that Egypt’s wheat consumption will grow by 2% to 20.5 million mt – a rate that could take demand past 23 million mt by the end of the decade.

Last year Egypt imported mostly Black Sea wheat - particularly Russian and Ukrainian. But in 2022/23, the volume of Ukrainian imports decreased dramatically, while supplies of Russian wheat increased. Between them, Russia and Ukraine covered 80% of Egypt’s wheat import demand before the war. However, in 2022 Egypt’s imports of Ukrainian wheat decreased by 71% to 918,000 tons compared to 2021, while imports of Russian wheat dropped only by 1% to 5.4 million tons. 

Russia still remains the leading wheat supplier to Egypt in 2022/23, with 4.5 million mt imported in July-January 2022/23, up 26% versus the previous season, according to Rusagrotrans data. 

Surprisingly, France supplied Egypt with about 1.2 million mt of wheat in 2022, becoming the second biggest supplier after Russia, according to reports in Egyptian news outlet Al-Ahram, quoting the French Ambassador to Egypt, Marc Baréty. 

Baréty highlighted the strength of current cooperation between both countries, which improved after French President Emmanuel Macron visited Egypt in November 2022. In March 2022, France and Egypt resolved a quality issue regarding wheat moisture after Egypt announced it would increase the maximum moisture level permitted in wheat to 14%. Still, French wheat has not always proved competitive for Egyptian buyers.

“Despite some bearish price trends, French wheat can hardly compete with a grain of Russian or Romanian origin. So I do not see an improvement of the position of this origin in the Egyptian market,” a Cairo-based grain trading company representative told Fastmarkets. France remains the most significant European soft wheat supplier to markets outside the EU; with the country exporting 8.39 million mt since the beginning of the 2022/23 season, followed by Romania (2.5 million mt), Germany (2.4 million), and then the Baltic countries, according to customs data.


Tim Worledge
Fastmarkets


Svitlana Synkovska
Fastmarkets

In the current season, Egypt has actively searched for new sources of wheat, holding official discussions with Germany, Serbia, and Romania alongside boosting ties with France.

This February, Egyptian officials signed an agreement with Serbian officials to allow the import of 1 million mt of wheat from the country, shipped via the Romanian port of Constanta to the Egyptian ports of Alexandria and Damietta.

“Before this agreement, Egypt had experience purchasing Serbian wheat, but the private sector bought it. So this will be the first time wheat will be purchased by the government,” a Cairo-based grain trader Agricensus, with officials also discussing the potential to supply Egypt with yellow corn and poultry.

Earlier this year, Egyptian officials also discussed the signing of a long-term import contract with Germany. “Egypt is looking forward to increasing its imports of German wheat and flour, both at the governmental level or the private sector,” Egyptian Minister of Supply and Internal Trade Ali Al-Moselhy said after a meeting with the German Agriculture minister, Silvia Bender back in February.

And it’s not just Egyptian officials, as private traders are also actively expanding their list of wheat suppliers, with the private sector diversifying some of its purchases, with shipments from India, Brazil, Germany, and the United States registered recently, alongside staple Russia and Ukraine flows.

Nevertheless, the Black Sea remains vital, with Egypt’s state buyer the General Authority For Supply Commodities (GASC) buying 600,000 mt of Russian milling wheat after concluding its massive wheat tender in April. 

The volume is to be shipped between May 10-31 2023, in 40,000 mt and 60,000 mt consignments, with the agency paying on average $275/mt FOB Kavkaz/Novorossiysk and $293.40/mt delivered CFR. With this purchase, GASC has booked a total of about 5.7 million mt of wheat for delivery in the 2022/23 marketing year, with the lion’s share booked via direct deals. That compares with 4.7 million mt bought during the same stage a year ago. 

With increasing supply risks and growing population, the Egyptian government is trying to stimulate farmers to produce more wheat. Earlier this year, Egyptian officials announced ambitious plans to produce 70% of the country’s wheat needs locally by 2030. According to the National Campaign to Preserve Wheat, these plans could be achieved by the expansion of land reclamation, by developing new seed varieties adapted to the modern irrigation methods and climatic conditions, and by increasing farmers’ education projects. 

In 2021, the Egyptian government started an initiative to reclaim an area of more than 2,200 square kilometers of desert by 2024 in the South Valley of the Toshka area. This project aims to increase agricultural production in accordance with the country’s efforts to encourage investment and create job opportunities through agriculture and food sector.

The USDA estimates that in 2023, Egypt’s wheat production will not exceed 9.8 million mt, the same level as in 2022. However, trade sources have expressed doubts about the figure and have expressed slightly more restrained outlooks that assume Egypt’s wheat crop could be a maximum of 9.5-9.6 million mt in 2023. 

In April the Egyptian government announced another increase in its local wheat procurement price, raising it 20% to EGP1,500 per ardeb (about $324/mt) for the 2023 crop, again according to local media outlet Al-Ahram. Since the beginning of this year, Egypt has already increased wheat procurement prices to an average of EGP1,250 per ardeb ($270.60/mt), an increase of more than 40% compared to the previous year.

Moreover, the new price is 50% higher than the initial price the government had set in August 2022 for crop 2023 procurement. This decision is one of the tools aimed at supporting directives from President Abdel Fattah El-Sisi as part of a plan to stimulate Egyptian farmers to produce more key crops and reduce expensive imports of agricultural commodities.

The country plans to purchase about 4 million mt from local farmers this year, 5% less than in 2022 and dramatically below the target of 6 million mt announced by the government back in 2022. The country’s wheat procurement season usually starts in mid-April and lasts until mid-July.

To build consensus, Egyptian authorities have already made sizable efforts through development cooperation with multilateral and bilateral development partners to manage food security challenges and increase strategic grain storage capacities. In 2023, representatives of the Egyptian government and the European Union signed an agreement to provide €40 million targeted at strengthening food security for the country and supporting wheat production in Egypt. The grant was part of the European Union’s Support for Food Security in Egypt program, valued at about €100 million.

As part of the new agreement, the Italian Agency of Development Cooperation (IADC), will cooperate with the Egyptian Ministry of Agriculture to enhance wheat production in Egypt by improving farmers’ access to certified seeds and modern agricultural technologies. The Egyptian Ministry of Supply and the IADC will also build field silos and install systems to control wheat movement from farmers to silos.

Overall, the current cooperation portfolio between Egypt and the EU stands at about €1.3 billion, with funded projects including multiple bilateral and regional cooperation and blended finance mechanisms.

Fastmarkets keeps its hand firmly on the pulse of the Egyptian grain market and aims to provide local and international grain traders with the actual information about Egyptian wheat market trends.

Our price monitoring includes not just comprehensive pricing services at all primary exporting origins, but also delivered prices such as our newly launched North Africa wheat price, that charts the main price moves into the world’s most significant wheat-buying region.

All that is backed by a comprehensive news service, focusing on price developments in physical markets and key insights into the main growing, buying and selling activity. Alongside that, we also provide insight on freight and logistics to ensure you have a full, balanced view of the health of these critical markets. 

Also, this year once again Fastmarkets is organizing its international grain conference in Cairo. Fastmarkets’ 6th Grain and Oilseeds MENA conference, 2023 (Cairo, Egypt, June 20-22, 2023) is where leading industry experts will debate opportunities to diversify sources of supply and capture all the latest news in the grain trade. 

Among growing concerns around an imminent food crisis caused by the Russia-Ukraine conflict, together, we will consider alternative routes and origins for grain shipments to the North African region. And, following Fastmarkets’ recent launch of the delivered North African wheat price designed to aid importers in managing volatility, you will hear more about how to use our pricing tools within contractual agreements. Main topics of the conference will be:

 

 assessing grain trade in the MENA region in a new reality, 

 MENA and Egypt food security, 

 overview of 2023 harvest in North Africa, 

 MENA milling wheat and flour markets, 

 developments in the processing and storage industry

 MENA milling and crushing sectors updates,

 strategies to manage price volatility,  

different origins options for Egypt\MENA, 

 oilseeds and vegetable oils trade

 etc.

We are glad to have Miller Magazine as a Media Support of the event. With so much to talk about, do not miss this chance. Register today and join us in Cairo!