Traders have noted that Russia’s curbs on wheat exports have unexpectedly helped Ukraine secure profitable sales to Egypt this week, while also causing prices to rise for the world’s top importer.
On Monday, Egypt’s state grains buyer GASC made a purchase of 290,000 metric tons of wheat in an international tender. This purchase comprised 120,000 tons from Ukraine, 120,000 tons from Romania, and 50,000 tons from Bulgaria.
Russia, being the world’s leading wheat exporter and Egypt’s most crucial supplier, was excluded from this sale. This was due to unofficial policies implemented by Russia to prevent a price surge at home as it aims to combat inflation, which is partly driven by military spending. The restrictions, mostly unannounced officially, include setting a minimum export price, imposing export taxes, and limiting the sales of Russian grain by foreign trading houses.
One trader commented, “Had Russian exporters been allowed to offer realistic market prices, which would be much lower, I think they would have pretty much wiped up the Egyptian sale.” The same trader also added, “The Russian moves are making Ukrainian supplies look more attractive, especially to importers in a difficult financial state like Egypt.”
The Russian agriculture ministry did not promptly respond to a request for comment regarding whether government grain export policies had led to the loss of business to Ukraine in this week’s Egyptian tender.
A trader in Ukraine stated that the Russian restrictions had presented more opportunities, despite the fact that Ukraine had already achieved around 60% of its potential sales this year. This trader said, “The cheapest supplier is leaving, so it’s probably not who wins but who loses,” referring to how Russian policies could increase the cost of wheat for importers.
Hesham Soliman, an Egyptian trader, said that Russia was holding off waiting for prices to rise and profitability to increase. He further explained, “This isn’t just about Russian export restrictions. Russia knows it controls the market and is acting accordingly.” He also mentioned that Egypt’s state buyer had countered by purchasing Black Sea wheat from other sources.
Noamany Nasr, a former adviser to Egypt’s supply ministry, pointed out that Russia frequently introduced subtle barriers to curb its own exports, whether for the purpose of raising prices or due to internal reasons. He added, “Ironically, this benefits Russia’s competitors.”
Egypt’s supply ministry announced on Tuesday that after the purchase, it now has strategic reserves sufficient for five months of consumption. However, traders expect that it will need to secure additional supplies in the coming months.
Another European trader said, “There’s still supply in Romania where farmers have been holding onto a lot of their crop.” The trader also noted, “In Bulgaria, supply is gradually getting tighter. In Ukraine, there’s not a huge amount left, though they haven’t been shipping as vigorously as the Russians.”
Russia’s Grain Export Policies Unintentionally Aid Ukraine’s Sales to Egypt