In the beginning of 2020, Egypt, which remains the leader in the global wheat imports and the key sales market for the Black Sea grain, started activating its purchasing rates. According to the country's customs statistics, in the first half of January 2020 Egypt imported almost 824 thsd tonnes of wheat, an increase of 73% compared with the same period of December 2019, and up 86% compared with January 2019. At the same time, the supplies from the Black Sea region (44% from Russia and 30% from Ukraine) formed the lion's share of the grain imports, while the French share totaled nearly 15% only.
Both in January 2020, and during the completed period of 2019/20 MY, there was formed the fairly high level of competition between wheat suppliers to Egypt, which was demonstrated by the recent tender held by Egypt at the end of last week, when the General Authority For Supply Commodities (GASC) purchased milling wheat of French origin only. The significant rise of the prices of Black Sea wheat in early January became one of the reasons for the situation development, which led to some reduction of trading activity rates, and loss of its positions on the global market, reported the Head of the local markets department, Anna Tanskaya.
At the same time, at the end of January 2020 the dynamics of prices of Ukrainian and Russian wheat started demonstrating the downward trend, due to the similar dynamics on the foreign market, in terms of the general tension, due to the current fears about the further development of the situation with coronavirus outbreak. In addition, improvement of the condition of winter crops areas in terms of coming of long-expected precipitations, provided the additional pressure on the prices. As a result, since the middle of last week the prices of Russian wheat 12.5% protein content on FOB basis decreased by 5-6 USD/t, and as of the beginning of February 6, the prices totaled 225-230 USD/t, which put pressure on Ukrainian wheat with 12.5% and 11.5% protein content, which offer prices reached 223-227 USD/t and 220-225 USD/t (down 3-4 USD/t) respectively, the expert added.
According to A.Tanskaya, the decline of prices may become rather short-lived, and in the nearest future the dynamics of the export prices of Black Sea wheat will form the upward trend, which is supported by the high global demand for the grain, slowing down of the sales by agrarians both in Russia and Ukraine, as well as the controversial impact of changes in the agro-climatic conditions in the region in February 2020 on winter crops.
As for the global demand, if the demand activity from Asian countries decreases, North Africa will become the key sales market for Black Sea wheat. According to the USDA figures, in 2019/20 MY the import potential of Egypt in the wheat sector is estimated at 12.5 mln tonnes, Algeria — 7 mln tonnes, Morocco — 4.8 mln tonnes, and Libya — 1.5 mln tonnes, and for the first 7 months of the current season the demand rates still remained uncovered, said A.Tanskaya.
You can become acquinted with more detailed information on the prospects of grains and by-products exports from the Black Sea region to Egypt and other countries of the MENA region, within frames of the international conference "Middle East Grains&Oils Congress", to be held in Cairo, Egypt, on March 3, 2020.
