Egypt Says Russian-Ukrainian Tensions Increase Wheat Market Volatility

A wheat farmer in Egypt. (Reuters file photo)
A wheat farmer in Egypt. (Reuters file photo)
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Egypt Says Russian-Ukrainian Tensions Increase Wheat Market Volatility

A wheat farmer in Egypt. (Reuters file photo)
A wheat farmer in Egypt. (Reuters file photo)

Egypt is working on several preventive measures to hedge the volatility of the wheat market amid the current tensions between Russia and Ukraine, the two largest wheat exporters in the world.

Minister of Supply and Internal Trade Ali al-Moselhi warned that the tensions are increasing the uncertainty in the market.

The official Middle East News Agency quoted Moselhi saying that the government has adopted several measures to secure wheat reserves and diversify its import origins.

He stated that the supply season for the strategic crop will start in April, adding that there would be a surplus and the strategic reserve will even last until November.

Egypt's wheat strategic reserve is safe and will suffice for more than five months, assured the minister.

"A finance ministry committee has been formed to study hedging policies, and discussions will be completed at the beginning of next month so we can decide if we should go forward with it or not," he explained.

A potential invasion of Ukraine by neighboring Russia could lead to interruptions to the flow of grain out of the Black Sea region, adding upward pressure on prices.

Russia has repeatedly denied it is planning such an invasion.

Data from two regional traders show that Egypt, one of the world's top wheat importers, bought about 50 percent of its wheat from Russia and about 30 percent from Ukraine last year.

The General Authority for Supply Commodities (GASC), the state's grains buyer, has diversified wheat sources and recently adopted Latvian wheat as a new import origin in November.

The government is also considering overhauling its decades-old food subsidy program, which provides a daily bread allowance to nearly two-thirds of the population.

According to the Finance Ministry, the program costs the government about $5.5 billion, with higher wheat prices expected to add $763 million to the 2021/2022 budget.

In December, Prime Minister Mostafa Madbouly said Egypt is "no longer isolated from global inflationary pressures," adding that it was time to "revise" the program.

Abbas al-Shenawy, an agriculture ministry official, had previously announced that Egypt planted 3.62 million feddans of wheat for the current 2022 season.

He explained that the cultivated area might increase slightly during the coming period, but will not exceed 3.7 million feddans.

The regular wheat planting season began in mid-November and ended in January.

Egypt imported 5.5 million tons of wheat in 2021, while the total domestic supply amounted to 3.5 million tons.

Last November, the Egyptian cabinet approved a procurement price of 820 Egyptian pounds per ardeb for wheat bought by the government from local farmers ahead of planting for the new season.

The new procurement price at 23.5 percent purity wheat was approved after a complete study by the agriculture and supply ministries, based on global prices and local costs per feddan unit of land.



Saudi Budget Shows Continued Government Spending on Mega-Projects

King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
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Saudi Budget Shows Continued Government Spending on Mega-Projects

King Abdullah Financial District in Riyadh (Asharq Al-Awsat)
King Abdullah Financial District in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s third-quarter budget results this year reflect the government’s commitment to boosting spending on mega-projects while working to increase revenue and contain the budget deficit.
Saudi Finance Minister Mohammed al-Jadaan stressed that managing the deficit is a key priority. He outlined strategies to ensure sustainable debt management, including directing debt to high-return sectors and attracting domestic and foreign investments.
The Ministry of Finance reported a budget deficit of SAR 30.23 billion ($8.06 billion) in the third quarter, down 15.6% from the same period last year. This brought the total deficit for the first nine months of the year to SAR 57.96 billion.
Government Spending and Revenues
Government revenues grew 20% in the third quarter to SAR 309.21 billion ($82.4 billion), while spending rose 15% to SAR 339.44 billion.
Non-oil revenues increased 6% year-on-year to SAR 118.3 billion, though they were 16% lower than in the previous quarter. Oil revenues climbed 30% year-on-year to SAR 190.8 billion but dropped 10% from the second quarter.
As of the third quarter, Saudi Arabia’s actual revenues for 2024 reached SAR 956.233 billion ($254.9 billion), a 12% rise from 2023.
Saudi Arabia’s spending topped SAR 1 trillion ($266.6 billion) by the end of the third quarter, a 13% increase from SAR 898.3 billion ($239.5 billion) a year earlier. The budget deficit for this period reached SAR 57.96 billion ($15.4 billion).
Saudi Budget Outlook and Reserve Update
The Kingdom’s Finance Ministry expects 2024 revenues to reach SAR 1.172 trillion ($312.5 billion), slightly below last year’s SAR 1.212 trillion ($323.2 billion). Expenditures are projected at SAR 1.251 trillion ($333.6 billion), with a budget deficit of SAR 79 billion ($21 billion), close to last year’s SAR 80.9 billion ($21.5 billion). By the end of the third quarter, the general reserve balance stood at SAR 390 billion ($104 billion), with the current account at SAR 76.7 billion ($20.4 billion) and public debt at SAR 1.157 trillion ($308.7 billion).
Vision 2030 Projects, Economic Reforms
Shura Council member Fadhel al-Buainain attributed the spending increase to Vision 2030 projects and social welfare programs, noting a 6% rise in non-oil revenues and a 16% boost in oil revenues.
He stressed that these gains contribute to financial stability and diversification efforts.
Enhanced Services and Growth Sectors
Dr. Mohammed Makni, Assistant Professor of Finance & Investment at Imam Muhammad ibn Saud Islamic University, highlighted the government’s focus on improving health, education, and quality of life, which are part of Vision 2030 goals impacting citizen services.
Speaking to Asharq Al-Awsat, Makni explained that Saudi Arabia’s recent expansionary spending aims to complete Vision 2030 projects.
He added that the third-quarter budget reflects positive growth across oil and non-oil activities, which have boosted revenues.
Economist Dr. Mohammed al-Qahtani pointed out that non-oil sectors and efficient spending helped reduce the third-quarter deficit.
He cited strong growth in tourism, culture, and entertainment as key contributors to non-oil revenues. Al-Qahtani expects continued improvement in the fourth quarter, especially if oil prices strengthen.