Egypt bags cheap Russian wheat, signs new silo deals

By Eliot Beer

- Last updated on GMT

Egypt was the second-largest buyer of Russian wheat last year, behind only Turkey, said Russian president Vladimir Putin.
Egypt was the second-largest buyer of Russian wheat last year, behind only Turkey, said Russian president Vladimir Putin.

Related tags: Vladimir putin, Egypt

Egypt will buy more wheat from Russia this year, taking advantage of historically low prices, while it continues with a major grain silo programme to improve domestic storage capacity.

In a tender agreed in late August, Egypt’s state grain authority, the General Authority for Supply Commodities (Gasc), bought 60,000 tonnes of Russian wheat at US$190.07 per tonne, including freight charges. This compares to the US$205 per tonne Gasc paid for Russian wheat in July, or the US$273.11 per tonne for US wheat in February.

Putin promises more wheat

Shortly before the tender, Russian president Vladimir Putin pledged Russia would sell more of its wheat to Egypt. According to the president, Egypt was the second-largest buyer of Russian wheat last year, behind only Turkey, with 4m tonnes of Russian grain making up 40% of Egypt’s foreign wheat requirements.

Egypt is the world’s largest importer of wheat, relying on foreign grain to supplement its domestic production, which reached 3.7m tonnes in 2014, and a reported 5m tonnes this year, according to Daily News Egypt. The paper also reported earlier in August that the Egyptian Ministry of Supply had increased the proportion of imported wheat allowed in flour milling, from 15% to 25%, in order to ensure sufficient supplies of flour for bakeries.

More silo projects agreed

On the domestic production side, last month Egypt finalised agreements with the UAE and Italy to build more grain storage silos across the country. Grain storage is a significant issue for Egypt, with many regions relying on traditional “shouna​” storage facilities, which can result in the loss of up to 40% of the harvested grain, to spoilage, pests and theft.

The UAE will complete 25 silos by March 2016, with a total storage capacity of 1.5m tonnes, aimed at cutting wheat wastage by 10%. The US$300m project will see silos built across 17 different governorates, in co-operation with the Egyptian Holding Company for Silos and Storage, the Ministry of Agriculture and the General Company for Silos and Storage.

Italy has also agreed to a US$17m project to build 10 silos in Egypt which will store 500,000 tonnes of wheat, as part of the countries’ US$45m debt-swap agreement. The deal also has a second phase, including the construction of facilities to store grains, fruits and vegetables, at a cost of US$28m.

Last year US firm Blumberg Grain signed a US$28m contract to help the Egyptian army redevelop the country’s shouna storage facilities​. And earlier this year, Care and Mondelez announced results from a programme to improve wheat harvests​, with yields up 10% on average. 

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