Egypt wheat imports may fall to 9-year low as war disrupts trade

Egypt, the world’s biggest wheat buyer, is cutting back on purchases as two of its largest suppliers are embroiled in a war that has driven prices to record highs.

The country’s imports could fall to 11 million tons in the season that kicks off in July, according to a report from the U.S. Department of Agriculture’s Foreign Agricultural Service. That would be the lowest in nine years. The agency also pared its estimate for the current year to 12 million tons, 4% below USDA’s official forecast. 

The figures are a fresh example of how surging commodity costs are curbing demand in the wake of Russia’s invasion of Ukraine. Egypt has been struggling to maintain a bread subsidy program used by about 70 million of its citizens with the coronavirus pandemic hitting the national budget, and surging wheat prices are exacerbating the challenge.

“The war between Russia and Ukraine is potentially aggravating already unsettled supply chains and causing major disruptions of wheat supplies to import destinations in the Middle East and North Africa,” the report said. “Egypt is not isolated from these catastrophic events, which is already affecting its imports of wheat from both countries.”

Egypt bought more than 80% of its wheat from Russia and Ukraine over the past five years, lured by their low prices and quick shipping times compared with other regions, according to the agency. Ukrainian ports shut when the war erupted last month, and economic sanctions against Russia also make purchases more difficult, it said.

The country’s state-run buyer—which imports about 40% of Egypt’s wheat—scrapped two straight tenders recently, as offers dried up and prices soared. Egypt now plans to hold off on further tenders until mid-May and is holding talks with other shippers like Argentina and France on supplies.

The report also cut the outlook for Egyptian corn imports to 9.2 million tons in the current season, 0.5 million tons below the official USDA estimate. Purchases will hold at that level next year. The country often sources about a quarter from Ukraine.