Russia urges debate on wheat aid for Egypt

Reuters News
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Posted: Jul 15, 2013 5:13 AM
Russia urges debate on wheat aid for Egypt

By Polina Devitt and Maha El Dahan

MOSCOW/ABU DHABI (Reuters) - Russia and other countries should hold discussions on possible humanitarian deliveries of wheat to Egypt, the world's largest importer of the grain, as it faces an acute shortage, Russia's deputy agriculture minister said.

Egypt has less than two months' supply of imported wheat left in its stocks, ousted President Mohamed Mursi's minister of supplies said last week.

"We need to discuss questions related to humanitarian aid deliveries to Egypt with the world community ... There have been no requests (from Egypt) yet," Deputy Agriculture Minister Ilya Shestakov told a news briefing in Moscow on Monday.

Shestakov's remark appeared to be a reversal of policy since Russia rejected a request from Mursi in April for help securing supplies of vital commodities on concessionary terms when the former president of Egypt visited Moscow.

"If it's for free or long-term financing, definitely Egypt will accept it," a Cairo-based trader said.

"Right now economically, with the money from the Gulf, Egypt is in a better position compared with two weeks ago," the trader added.

As of last week, Egypt, which usually imports about 10 million tons a year, with Russia as a major supplier, had just 500,000 tons of imported wheat left.

Earlier this month in addition, it bought 180,000 tons from Romania and Ukraine on the international market on commercial terms for delivery in early August.

Grain traders expect Egypt's state grain buyer, the General Authority for Supply Commodities (GASC) to issue a new tender to purchase wheat soon, although GASC's vice chairman said last week that high prices and availability of stocks made that unlikely.

The idea that Russia could send wheat as humanitarian aid came as a surprise because of Russia's status as a big commercial supplier to Egypt and the fact that its own wheat stocks are low.

"It wouldn't make much sense really, because the wheat trade is in the hands of the private sector rather than the government, unless they have some old crop wheat that they would like to give as aid when they are cleaning up their silos," a second Cairo-based trader said.

The Russian government, meanwhile, plans to start buying grain on the domestic market to replenish state stocks after the end of harvesting campaign in late September or October, Shestakov said.

Officials said previously that the government might buy 6 million tons of grain for its stocks this year.

Taking into account state restocking campaign and low carryover stocks, Russia's supply and demand balance of grain will be tight this 2013/14 marketing year, which started on July 1, Shestakov said.

He kept the ministry's 2013 grain crop forecast unchanged at 95 million tons and said that from this amount 71 million tons would be used to cover domestic demand. He pegged the 2013/14 exportable grain surplus at 20 million tons.

(Additional reporting by Sarah McFarlane in Cairo; Writing by Polina Devitt and Lidia Kelly; Editing by Douglas Busvine and Jane Baird)