Egypt wheat stocks dwindle, sufficient for 89 days

Egypt wheat stocks dwindle, sufficient for 89 days

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Wed, 13/03/2013 - 20:44

Egypt's strategic stocks of wheat have fallen to 2.207 million tons, enough to last 89 days, a Cabinet report said on Wednesday as the top global importer struggles to ensure supply through an economic and political crisis.

Economic turmoil and a depreciating pound have made it harder it to arrange payments for wheat imports, with the pace of purchases having tumbled since the start of the year.
 
While stocks have fallen, the government also upped its projection of the local harvest to more than 9 million tons — a number that would exceed the current record of 8.523 million tons in 2009/10, according to US Department of Agriculture estimates.
 
The Cabinet's forecast for its upcoming harvest is also above the USDA's crop estimate of 8.5 million tons.
 
International traders say that even with a brightened harvest outlook, the country will need to buy further significant amounts to maintain minimum stock levels prior to its harvest being ready for consumption.
 
"The total strategic stocks of local and imported wheat have reached 2.207 million tons, enough for 89 days until 9 June 2013," the Cabinet said.
 
It added that this amount would rise when shipments from deals already agreed arrive. When these amounts arrive it will add an extra 479,000 tons.
 
The current stock levels compare with 2.292 million tons, or 95 days supply, reported on 27 February.
 
State grain buyer the General Authority for Supply Commodities bought around 235,000 tons of wheat on the international market between 1 January and 20 February, roughly a third of what it purchased in the same period a year ago.
 
Strategic buys
 
Egypt normally buys strategically to ensure that it has wheat stocks equal to at least six months' consumption in its silos. It relies heavily on imports to feed its 84 million people — half of the wheat they consume is imported.
 
"This is lower than they historically have carried in the past," an unnamed European trader said, commenting on the new figures. 
Shipments expected from the United States in the coming weeks will help maintain the current levels, the trader added.
 
"However, I think Egypt's private buyers or GASC need to buy an additional 800,000 to 1 million tons of wheat for shipment before the end of May when their local crop becomes readily available to keep an adequate level of stocks."
 
The weak Egyptian pound has pushed up the cost of wheat imports paid for in dollars. The pound has fallen more than 8 percent since the end of last year as concerns deepen about the state of the country, hit by political infighting and unrest.
 
Food supply is a politically-sensitive issue in Egypt, where rising food prices are being passed on to struggling consumers and shortages have provoked unrest in the past.