Egypt's private sector wheat imports stall due to dollar shortage
By Sarah El Safty
CAIRO, Oct 4 (Reuters) - The price of wheat and flour used to make unsubsidised bread has spiked in Egypt as importers struggle to pay for wheat stuck at ports amid a dollar shortage, traders and the country's chamber of cereals told Reuters this week.
Around 700,000 tonnes of wheat haven't been released from customs, causing around 80% of mills producing commercially sold bread, pasta, and other goods to "cease activity completely", according to a Sept. 26 letter from the Federation of Egyptian Industries' Chamber of Cereals to the supply minister.
While global wheat prices have fallen to their levels before Russia-Ukraine war, prices in Egypt have risen due to depleting stocks, said Hussein Boudy, the chamber's deputy head.
Egypt's importers can no longer replenish their wheat stocks amid a dollar shortage caused by a rising import bill and decreasing tourism revenues from two of its largest markets - Ukraine and Russia. Loss of confidence in the Egyptian pound by investors also contributed to the shortage.
Wheat prices rose by around 10% to EGP 9,000 ($458.02) per tonne in the last two weeks, Boudy said, while some traders reported steeper rises of up to 15%. Flour also rose by 18% to EGP 11,500 ($585.24) per tonne, traders said.
"Bigger mills used to store for a month and a half or two, but today some mills have stocks for seven to five days." said Walid Diab, managing director of the Egyptian Millers Company. "We are in the red zone."
Boudy added that one company had requested to purchase from the state grains buyer's strategic reserves.
The government "will work on the issue" of declining private sector wheat stocks, Egypt's supply minister told Reuters on the sidelines of a conference on Sunday.
As foreign currency reserves dwindled, authorities introduced rules in March that restricted access to dollars for imports.
Although wheat and other strategic goods were exempted, private sector traders say wheat import payments have nearly stopped since September and no new contracts have been signed.
Imports of corn, poultry and soybeans have also been affected, traders say.
"Suppliers understand that there's an issue with Egypt but now they don't want to do new business until the old stocks are released," said one local trader.
Since early September, only 2,000-3,000 tonnes of wheat got through customs, the Chamber's letter said. Monthly private sector needs are estimated at around 450,000 tonnes, and, according to the Chamber, mills need the immediate release of around 300,000 tonnes.
The supply crunch has caused a spike in the price of bread in some bakeries, said Hesham Soliman, a Cairo-based private sector trader.
There were no signs of shortages at bakeries, said Attia Hammad of the Cairo Chamber of Commerce, though he said some bakeries could hike prices or decrease the weight of loaves because of rising costs.
Egypt, with a population of 104 million, is typically the world's biggest wheat importer. Private sector imports recently overtook those by the state buyer, which purchases wheat for a large subsidized bread programme. ($1 = 19.6500 Egyptian pounds) (Reporting by Sarah El Safty; editing by Aidan Lewis and Aurora Ellis)
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