Top Wheat Importer Egypt Balks at Buying Again on High Price
Top Wheat Importer Egypt Balks at Buying Again on High Price
(Bloomberg) -- The rally in wheat that’s helped drive food inflation is deterring purchases by the world’s biggest importer.
Egypt, which imports vast amounts of grain to subsidize bread for its citizens, said it canceled Tuesday’s wheat tender because of high prices. It’s the fourth time this year that it has balked at offers in a tender -- an unusually high amount -- highlighting how high food costs are disrupting trade.
Benchmark Chicago wheat futures climbed more than 20% in the past year as extreme weather hit harvests from North America to Russia, prompting worries about a shortfall. Buyers have also faced the headache of higher shipping costs, at a time when the world is contending with its worst hunger crisis in 15 years and an energy crunch that threatens to make things worse.
Egypt’s General Authority for Supply Commodities said it canceled Tuesday’s tender as offers came in higher than expected. Purchases were already running well behind last year’s pace, though the country typically keeps enough stockpiled wheat to last several months.
Fewer offers of Russian wheat compared with the previous tender may have prompted Egypt to hold off buying, said Matt Ammermann, a commodity risk manager at StoneX.
Russia has traditionally dominated sales to Egypt, but has been less prominent this season due to a smaller harvest and new floating export duties that make it more difficult to sell grain weeks or months ahead of time.
The tender was also being held on the same day that the U.S. government will release its key monthly supply and demand report, which can cause big moves in prices once released.
GASC was seeking wheat for the Nov. 23-to-Dec. 3 period. The average price that the state buyer has paid since purchases for this season began has jumped by about $100 a ton.
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