Egypt’s supply minister said that tensions between Russia and Ukraine, the two largest wheat exporters, raised uncertainty in the market, with the government currently working on several protective measures, according to state news agency MENA.
The government is working on diversifying its wheat import origins in an effort to safeguard its strategic reserves, Supply Minister Ali Moselhy told MENA. He added that studies regarding hedging against a rise in commodity prices are still ongoing.
“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,” Moselhy said.
Egypt’s strategic reserves of wheat currently stand at 5.4 months, he added.
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.
Egypt, often the world’s top wheat importer, shipped around 50 percent of its wheat purchases from Russia last year and around 30 percent from Ukraine, according to data from two regional traders.
Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), has worked on diversifying its wheat sourcing, recently approving Latvian wheat as a new import origin in November.
The government is also studying an overhaul of its decades-old food subsidy program, which provides a daily bread allowance to nearly two-thirds of the population.
The program currently costs the government about $5.5 billion, with higher wheat prices expected to add $763 million to the 2021/2022 budget, according to Finance Ministry data.
Prime Minister Mostafa Madbouly said in December that Egypt is “no longer isolated from global inflationary pressures,” adding that it was time to “revise” the program.