Egypt Supply Minister Expects Wheat Prices to Stabilize

Egyptian workers harvest wheat in the village of Shamma in the Egyptian Nile Delta province of al-Minufiyah. (AFP)
Egyptian workers harvest wheat in the village of Shamma in the Egyptian Nile Delta province of al-Minufiyah. (AFP)
TT

Egypt Supply Minister Expects Wheat Prices to Stabilize

Egyptian workers harvest wheat in the village of Shamma in the Egyptian Nile Delta province of al-Minufiyah. (AFP)
Egyptian workers harvest wheat in the village of Shamma in the Egyptian Nile Delta province of al-Minufiyah. (AFP)

Egypt, the world’s largest wheat buyer, expects prices to stabilize in the coming months after recent highs driven by uncertainty during the coronavirus pandemic and recent protective measures such as the Russian export quota.

The North African country is one of the main buyers of Russian grain and has looked to bolster its strategic reserves of wheat, which the supply ministry said on Sunday were sufficient to cover five and a half months of consumption.

“We’ve seen highs over the last three months which, in my opinion, are not caused by what we used to say before, such as weak harvests or climate factors, it’s all coming from uncertainty,” Egyptian Supply Minister Ali Moselhy said.

The state grains buyer, the General Authority for Supply Commodities (GASC) raised purchases by almost 40% at the start of its buying season with the supply ministry instructed to keep six months of strategic reserves.

The stocks helped Egypt offset sharp increases in the price of wheat amid high global demand and a looming export tax and quota on Russian wheat, of which Cairo is a main consumer, but GASC purchases slowed slightly in the last quarter of 2020.

Russia, one of the world’s largest wheat exporters, will introduce a quota for overseas shipments of wheat, rye, barley and corn (maize) limiting exports to 17.5 million tonnes for the period Feb. 15-June 30 as well as a wheat export tax of 25 euros ($30.40) per tonne within that period.

The planned levy has triggered volatility in international prices as the market has tried to figure out whether this could curb exports or boost them.

Moselhy said that as vaccines are rolled out and global health conditions improve, the market will stabilize.

“The stocks entering the market are strong this year and at the same time production was not affected so there is no logical reason for prices to keep increasing,” Moselhy added.

Egyptian President Abdel Fattah el-Sisi ordered authorities to bolster strategic reserves in March as lockdowns imposed to contain the pandemic sparked concerns over food security and disrupted supply chains.

Moselhy said that Egypt’s new commodities exchange to trade rice, vegetable oils and sugar, will participate in the incoming local wheat harvest season starting mid-April.

He said that the exchange will be responsible for clearance, while the government will set the procurement price at which it will purchase wheat from farmers for the state’s food subsidy program.



Oil Prices Rise on Optimism Over Solid US Fuel Demand

FILE PHOTO: A pump jack drills oil crude from the Yates Oilfield in West Texas’s Permian Basin, as a 1.5MW GE wind turbine from the Desert Sky Wind Farm is seen in the distance, near Iraan, Texas, US, March 17, 2023. REUTERS/Bing Guan/File Photo
FILE PHOTO: A pump jack drills oil crude from the Yates Oilfield in West Texas’s Permian Basin, as a 1.5MW GE wind turbine from the Desert Sky Wind Farm is seen in the distance, near Iraan, Texas, US, March 17, 2023. REUTERS/Bing Guan/File Photo
TT

Oil Prices Rise on Optimism Over Solid US Fuel Demand

FILE PHOTO: A pump jack drills oil crude from the Yates Oilfield in West Texas’s Permian Basin, as a 1.5MW GE wind turbine from the Desert Sky Wind Farm is seen in the distance, near Iraan, Texas, US, March 17, 2023. REUTERS/Bing Guan/File Photo
FILE PHOTO: A pump jack drills oil crude from the Yates Oilfield in West Texas’s Permian Basin, as a 1.5MW GE wind turbine from the Desert Sky Wind Farm is seen in the distance, near Iraan, Texas, US, March 17, 2023. REUTERS/Bing Guan/File Photo

Oil prices edged up on Thursday, extending the previous day's rally, driven by optimism over US fuel demand following an unexpected drop in crude and gasoline inventories, while reports that OPEC+ may delay a planned output increase offered support.
Brent crude futures gained 11 cents, or 0.15%, to $72.66 a barrel by 0805 GMT. US West Texas Intermediate crude futures climbed 13 cents, or 0.19%, to $68.74 per barrel.
Both contracts rose more than 2% on Wednesday, after falling more than 6% earlier in the week on the reduced risk of a wider Middle East conflict. US gasoline stockpiles fell unexpectedly in the week ending Oct. 25 to a two-year low on strengthened demand, the Energy Information Administration said, while crude inventories also posted a surprise drawdown as imports slipped. Nine analysts polled by Reuters had expected an increase in gasoline and crude inventories.
"The surprise decline in US gasoline stockpiles provided a buying opportunity as demand appeared stronger than anticipated," said Toshitaka Tazawa, an analyst at Fujitomi Securities.
"Expectations of a potential delay in the OPEC+ production increase were also supportive... If they do delay, WTI could recover to the $70 level," he said. Reuters reported OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies such as Russia, could delay a planned oil production increase in December by a month or more because of concern over soft oil demand and rising supply. The group is scheduled to raise output by 180,000 barrels per day (bpd) in December. It had already delayed the increase from October because of falling prices.
A decision to postpone the increase could come as early as next week, two OPEC+ sources told Reuters.
OPEC+ is scheduled to meet on Dec. 1 to decide its next policy steps.
Manufacturing activity in China, the world's biggest oil importer, expanded in October for the first time in six months, suggesting that stimulus measures are having an effect. Markets are awaiting the results of the US presidential election on Nov. 5 as well as further details of China's economic stimulus. Reuters reported that China could approve the issuance of over 10 trillion yuan ($1.4 trillion) in debt over the next few years on the last day of its Nov. 4-8 parliamentary meeting. In the Middle East, Lebanon's prime minister expressed hope on Wednesday that a ceasefire deal with Israel would be announced within days as Israel's public broadcaster published what it said was a draft agreement providing for an initial 60-day truce. The push for a ceasefire for Lebanon is taking place alongside a similar diplomatic drive to end hostilities in Gaza.
But the market impact is likely to be muted.
"Most of the Middle East geopolitical risk was stripped out of the oil price after Israel's response to Iran over the weekend," IG market analyst Tony Sycamore said.
Iran said that Israeli strikes on Saturday, in retaliation for Iran's Oct. 1 attack on Israel, caused only limited damage.