Egypt, one of the global top wheat importers, has agreed to buy Indian wheat and plans to import at least three million tonnes (mt) over the next few months, trade sources said.
Egypt’s decision to buy Indian wheat was confirmed by The Union Commerce, Food and Industry Minister Piyush Goyal on Twitter this (Friday) morning. “…Egypt approves India as a wheat supplier. Our farmers have ensured our granaries overflow and we are ready to serve the world,” the minister tweeted.
Separately, Reuters quoted Egyptian Middle East News Agency (MENA) reporting that India has been added as a new wheat origin. MENA said Egypt Agriculture Minister El-Said Marzouq El-Qosair gave the information.
Annual imports
Accordingly, Egypt’s General Authority for Supply Commodities (GASC) had added India to its already accredited 26 wheat import origins, including Russia, Ukraine, France, Germany, Kazakhstan and the US.
Over the last couple of years, Egypt has been importing 12 million tonnes annually. In 2021, 80 per cent of the imports were from Russia and Ukraine.
The current Russia-Ukraine conflict has affected wheat supplies from both these nations to Cairo, forcing it to look at other competitive sources. Until now, Egypt relied on Black Sea wheat, originating from the erstwhile Soviet Union members, to provide subsidised bread to over 60 million of its population.
The foodgrain is normally purchased by Egypt’s official procurement agency General Authority for Supply Commodities (GASC). Recently, GASC had sought wheat and sugar from India to fill the void caused by Black Sea wheat.
Visit by team from Cairo
“The private trade in Egypt will buy three million tonnes (mt) of wheat from India. Orders could be placed in a month’s time for the import of Indian wheat,” said a trade source, not wishing to identify.
“The 3 mt purchase could be a bit on the higher side since GASC has to allocate the quota to traders, who will make the purchase from India. We will have to see how much Egypt will be actually buying,” said a Delhi-based exporter Rajesh Paharia Jain.
The decision comes as the trade delegation from Egypt, which arrived earlier. is winding up its India visit. The team had visited various facilities and grading centres in Punjab, Madhya Pradesh and Gujarat over the last 3-4 days.
‘Crab-cutting competition’
India would have to offer its wheat at $400-415 cost and freight (C&F) if it had to really make inroads into the Egyptian market, he said. “Recently, Egypt bought French wheat at around $430 a tonne. We need to discount for the slightly lower protein content in our wheat and higher freight rates,” he said.
“Importing countries are forcing crab-cutting competition among exporters. Otherwise, we can quote higher prices for wheat,” Jain said.
He pointed to the Bangladesh wheat tenders, in which bids after the Russian war had increased to $409.97 a tonne, but dropped to $399.19 this week. Bangladesh plans to import one million tonnes of wheat over the next few months and regularly begun floating tenders of 50,000 tonnes.
“Even last year, stiff competition among the Indian exporters resulted in not fetching good prices. We deserve to get better prices,” the exporter said.
GASC recent buys
Indian wheat contains 11.5-12.15 per cent protein content compared to France’s 12.5 per cent. “Shipping charges are around $40 a tonne for destinations such as France, whereas it is upwards of $70 from India since the consignments have to cross the Suez Canal,” Jain said.
On Wednesday, GASC bought 2.4 lakh tonnes of French wheat, 50,000 tonnes of Bulgarian and 60,000 tonnes of Russian wheat.
Reports said Russian wheat was offered at $460, while the German grain at $485.49 and the Bulgarian wheat at $480 (all C&F). Currently, benchmark wheat futures on the Chicago Board of Trade are quoted at a one-month high of $11.2 a bushel ($411.48 a tonne).
Prices begin to soar
Wheat prices have gained 32 per cent since the Russia-Ukraine war broke out on February 24. The conflict had also affected supplies of other food commodities such as corn, sunflower and barley. Over the past week, wheat prices have increased by over 7 per cent on supply concerns over drought in US wheat-growing areas, particularly where the Hard Red Winter variety is grown.
The US Department of Agriculture has cut by 3.1 million tonnes the world closing stocks for the current marketing season to August, triggering a bullish run in the wheat market. This has, in turn, helped Indian wheat growers fetch prices above the minimum support price of ₹2,015 a quintal in States such as Gujarat, Rajasthan, Madhya Pradesh and Uttar Pradesh.
Besides Egypt, countries in Africa, South Asia and South-East Asia are looking to India for wheat and other grain supplies in view of the Ukraine War.
India’s advantage
India enjoys an advantage in the global market as it is the only nation where the new wheat crop arrives between April and June. Until July, wheat is not expected in any other country. Besides, it enjoys a logistical advantage in South, South-East and West Asia. Countries such as Oman and the United Arab Emirates have also begun starting Indian wheat.
India’s wheat output this year is estimated at a record high of 111.32 mt compared with 109.59 mt a year ago. Besides, it had 18.9 million tonnes of stocks carried over from the last fiscal.
Last fiscal, India is projected to have exported a record high of over 7.5 mt of wheat, heading to Bangladesh.
This fiscal, exporters have already signed deals to ship out 3.5 mt of wheat until July. They expect the shipment to top 4.5 mt by July. According to exporters, India exported 1.25 mt of wheat from March 1 to April 12.
Published on
April 15, 2022
