Exclusive: Egypt is negotiating Emirati financing to buy Kazakh wheat traders
By Sarah El Safty and Michael Hogan
CAIRO (Reuters) – Egypt is negotiating a credit facility with an Abu Dhabi-based bank to finance wheat purchases from Kazakhstan, three traders told Reuters.
The move could offer Egypt a cheap alternative to grain from Russia, which has been supplying an increasing share of Egypt’s wheat since last year but recently blocked a deal to buy below an unofficial price floor for wheat purchases, traders say.
Egypt is one of the world’s main buyers of wheat and has sought to reduce its import costs as the country grapples with a foreign currency shortage that has led the country to defer wheat payments.
Talks on the loan agreement for purchases from Kazakhstan are at an early stage, with negotiations ongoing on the price and quantities of wheat as well as the value of the loan, a source familiar with the talks said.
The source and traders did not name the Abu Dhabi-based bank.
The traders said they learned of the possible deal on Wednesday during a wheat tender by Egypt’s state grain buyer, the General Authority for Supply Commodities (GASC).
They were told that GASC was negotiating a price that could be below the Russian government’s unofficial price floor, which was believed to have been set in the tender at a freeboard price of US$270 per tonne.
But they also cast doubt on the potential deal, saying that transporting wheat from Kazakhstan would be a logistical challenge and would require overland shipments through other countries.
GASC did not respond to a request for comment.
The unofficial price floor has proven an obstacle for both GASC and Russian wheat suppliers, who had increased their sales of relatively cheap Russian grain to Egypt since war broke out in Ukraine early last year.
The Russian government has not officially confirmed the minimum price. Traders see this as a move to curb their huge wheat exports and prevent tight domestic supply from driving up bread prices.
The Russian Agriculture Ministry recently blocked the private sale of 480,000 tons of Russian wheat to Egypt, apparently because it was sold below the price floor, traders told Reuters.
The wheat will now be supplied from other countries of origin such as France and Bulgaria, they added.
Egypt’s Finance Ministry said the cost of subsidies for food, especially bread, is expected to rise 41.9% to 127.7 billion Egyptian pounds ($4.14 billion) in the current fiscal year ending June 2024 become.
Kazakhstan is already an approved wheat import origin for Egypt, but purchases from the Central Asian country are rare.
The Egyptian government recently signed a $500 million loan agreement with the Abu Dhabi Exports Office (ADEX) to purchase imported wheat from the UAE-based agribusiness Al Dahra.
($1 = 30.8500 Egyptian pounds)
(Reporting by Sarah El Safty and Michael Hogan, Editing by Aidan Lewis and Mark Potter)
Copyright 2023 Thomson Reuters.
