Egypt wheat traders question state plan to use corn in flour

Egypt's wheat traders were uncertain about the government's plan to reduce wheat imports by introducing corn or sorghum flour in making subsidized bread, proposed to be implemented by April.

"They have been discussing it for one or two years, and every time they announce a start date, it gets canceled," said one Cairo-based grains trader Jan. 22.

Another domestic trader said there still hasn't been an official comment three months after the first media reports in October.

The government is considering a proposal where corn flour will be mixed with wheat flour at a 1:4 ratio, potentially saving around 1 million mt of wheat. If successfully implemented, this initiative could result in significant savings in foreign currency through the use of locally grown corn, according to media reports.

Several traders in Egypt and other sources within the baking industry have preliminarily opposed the plan, expressing concerns that it could impact the quality of bread due to the use of feed-quality corn, which is predominantly available in the market.

Traders noted that the prices of wheat and corn are often similar, with corn sometimes being more expensive than wheat. This raises questions about the feasibility and rationale behind the proposed plan's objective of saving money through the subsidized bread program.

"The price for Argentinian corn in the local market is cheaper than Russian 11.5% protein wheat," another Cairo-based trader said Jan. 22.

Although the decision is expected to be finalized in April, sources from Egypt said it is more likely to take effect after the Ramadan season, as significant decisions are typically avoided during this period.

"They have to keep the market stable without any problems. If they want to test or change some ideas about the bread, it should be after Ramadan, not during the month," the same Cairo-based trader said.

According to sources, attempts to mix corn flour into bread have faced challenges, with many complaints regarding the quality of the product.

"Previously, when small amounts were mixed in 2008, there were a lot of complaints from people in the street," an Egypt-based trader said.

Complaints included a foul smell from the bread, which had led the minister to halt the initiative, the trader added.

Any new proposal must be carefully planned, market sources from Egypt said, emphasizing that it is highly unlikely the government will proceed with the plan without proper consultation with those affected.

Russia has been the major source for wheat imports to Egypt, while corn sources to Egypt include both South America and Ukraine.

Platts assessed Russian wheat 12.5% protein on an FOB basis at $236/mt and Ukraine corn for FOB Black Sea Ukraine at $223/mt on Jan. 22, data from S&P Global Energy showed.