FEATURE: Egypt set to lead global wheat imports as corn supply sources diversify

Egypt ranks among the world's largest grain importers, with its extensive feed and food industry driving the demand for both wheat and corn. For the 2024-25 season, imports of wheat and corn are expected to rise by 1-3%, reaching 12.5 million mt and 8.2 million mt respectively, in response to increasing demand from these sectors and the forecast of lowering domestic production for corn.

Egypt's wheat demand and market trends

Egypt is set to become the largest wheat importer globally this marketing year 24 -25 (July -June), with projected purchases of 12.5 million mt, outpacing Indonesia and China, according to the USDA. This represents a 200,000 mt increase from last year and the third consecutive rise since 2022, driven by an influx of U.S. dollars facilitating imports.

Russia is a key supplier to Egypt, delivering 4.7 million mt of wheat from July to November. However, in the past few months, the market has been facing a slowdown in imports due to an oversupply of wheat amid abundant stocks and geopolitical tensions in neighboring countries that are key consumers of wheat flour, such as Sudan and Yemen, and Gaza. "For demand, they are almost out now," one flour seller said. Consequently, local wheat prices are trading below replacement costs, diminishing the urgency for imports. "Prices are stable on the local market and very low," said one buyer, while another seller added, "I didn't hear any trades for Egypt." In the coasters market, Russian wheat with 12.5% protein is being offered at $248/mt, while the 11.5% is priced at $237/mt CIF.

Traders are optimistic that demand will rebound in December as wheat stocks begin to dwindle. "I think demand will increase by the middle of December," said one trader, anticipating a full-scale import strategy by next year. Another buyer added, "Sudan is coming back slowly, so once we get close to replacement values, we'll resume importing."

However, the increased demand may be short-lived, as the country typically begins its harvest around mid-April, which usually leads to a decrease in import needs and a drop in domestic prices. Local wheat production is estimated at around 9.2 million mt. "Local prices will be pressured a little bit for a maximum of 2-3 months then," one buyer added.

In the Middle East and North Africa, state grain boards are vital for wheat imports to keep bread prices affordable, making them major global buyers. Notably, the price of baladi bread in Egypt was raised for the first time in 36 years, from 5 piastres ($0.001/kg) to 20 piastres ($0.04/kg) in June. Egypt's General Authority for Supply Commodities (GASC) accounted for at least 52% of Egypt's total wheat imports in the 2023/24 season. It has purchased for MY 24/25 so far around 3.17 million mt through tenders and private deals.

On Aug. 12, GASC made a significant change by tendering for wheat delivery several months in advance for October – April, a shift from its usual practice of short-term delivery tenders. Ultimately, however, they acquired 280,000 mt of Ukraine and Bulgarian wheat for October - November delivery at $259.24 - $269.25/mt CFR with 270 days letter of credit, aiming for private negotiations to fulfil the remainder.

As of October, Russian exporters have been directed to supply grain to Egypt, among 13 countries, without foreign intermediaries, including an unofficial wheat price floor at $250/mt. The price floor typically allows other origins to supply wheat to GASC at more competitive prices. GASC opted to purchase 290,000 mt from Bulgaria, Ukraine, and Romania for Nov. 25 and Dec. 15 deliveries, at $273 - $275.30/mt CFR with 270 days letter of credit in their last tender Nov. 4.

Platts assessed Russian 12.5% wheat for handysize vessels at $227/mt for shipments from late December to early January, a 0.44% decline on the week and the Ukraine 11.5% up $0.44/mt at $226/mt.

Egypt's corn demand and market trends

Egypt emerged as the eighth largest corn importer globally, buying 8 million mt in MY 23/24, and is expected to increase 2.5% on the year, according to the USDA. The Black Sea region and South America are the major corn sources, with Ukraine and Brazil as leading suppliers. From January to November 2024, vessel lineups by traders reported shipments of 7.2 million mt of corn to Egypt from Brazil, Ukraine, and Argentina at 3.5 million mt, 2.7 million mt and 680,000 mt respectively. Brazilian shipments were primarily via Panamax vessels, while Ukraine's were mainly through handy and coaster cargoes.

Towards the end of MY 2023-2024, Ukrainian corn faced challenges as prices rose due to increased demand from Turkey, diminishing its competitiveness in Egypt. As MY 2024-2025 began, Brazilian corn gained a competitive edge, with many consumers preferring South American corn until prices stabilized. A market source said, "Most of my clients prefer to buy South American corn from Egypt until prices stabilize in the international market." By late October 2024, Ukrainian corn prices fell due to reduced demand from Turkey, while Brazilian prices increased.

The interplay of rising Brazilian prices and falling Ukrainian prices made Ukrainian corn more attractive in the Egyptian market. An Egypt-based trader stated, "If you calculate today's replacement, Ukrainian corn will be cheaper." However, market sources indicated that the Egyptian market was well-covered for the year, as importers had secured supplies when Brazilian prices were notably low. A local source said, "The market didn't book South American corn at current levels. There was a significant wave of purchasing South American corn that has yet to arrive, priced between $230-$234, while Ukrainian corn was even higher at that time."

Despite these dynamics, a recent uptick in local corn prices during the second week of November encouraged buyers to source imported corn, particularly from Ukraine, which remained the most affordable option. A buyer in Egypt added, "Local prices increased by around 200-250 EGP, equivalent to about $5/mt, alongside a drop in Ukrainian corn replacement, which encouraged buyers to purchase Ukrainian corn." Trades were recorded for CIF Egypt at $231/mt, $232/mt, and $233/mt during the third week of November for handy-sized cargoes from Ukraine.

The feed industry is the primary end-user of corn in Egypt. However, recent trends indicate a shift towards soybeans as a replacement for corn in feed formulations. A local buyer said that daily corn consumption has decreased by 50% compared with usual levels. An Egyptian feed miller added, "We have reduced our corn imports and are focusing more on soybean meals." Additionally, another trader supplying to feed mills noted that their customers are increasingly interested in soybeans, which are primarily sourced from the U.S.

Platts assessed Ukrainian corn FOB POC at $213/mt on Nov. 28, up 0.9% on the week and FOB Santos was assessed at $213.77/mt, down 2.64% on the week Nov. 27.