Top wheat buyer Egypt’s latest purchase laid bare the eye-watering costs importers face as the Ukraine war upends the global grains trade.
The country is boosting efforts to ensure it has enough to feed its citizens, many of whom rely on a bread-subsidy program. In a tender on Wednesday, it drew offers from six companies, about half the normal number, traders who asked not to be identified said. The state-run buyer ultimately scooped up 350,000 tons, including French wheat, a rare Bulgarian cargo, and one from Russia.
That came at a high price: The amount booked averaged almost $490 a ton after factoring in freight. That’s up a whopping 44% from the rate paid in mid-February, just before the war erupted, and the most in at least six years. The large volume purchased, even at high prices, highlights Egypt’s urgency to build reserves, said Matt Ammermann, a commodity risk manager at StoneX.
Egypt’s cabinet recently cited wheat stockpiles as sufficient for just two and a half months, although its own harvest is now underway and could shore up supply. The country was forced to cancel its last two tenders as the war shut Ukraine’s ports and spooked traders from offering Russian cargoes.
Paris wheat futures rose as much as 2.6% to 409.50 euros ($445) a ton on Wednesday, nearing an all-time high.
Many nations in the Middle East and North Africa greatly depend on Black Sea grain, leaving their food supplies particularly vulnerable from the war. Soaring food costs have put people’s resilience there at a “breaking point,” according to the United Nations’ World Food Programme. And it comes just as the Muslim world marks Ramadan.
Russia has continued to ship grain to Egypt since the war began, with the country ranking among its leading destinations in March. Russian wheat has traditionally dominated sales in Egyptian tenders.
