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March 4, 12:00 Source: APK-Inform Views: 473

In 2018/19 MY, Egypt to remain the largest global importer of wheat

Egypt: agricultural profile

 

 

 

 

To date, Egypt still keeps its status of the largest country-importer of wheat in the world, and one of the most perspective destinations for the supply of agricultural products from the Black Sea countries. The ever-increasing population and the need to provide foods on the domestic market assist to further increasing of the demand rates. At the same time, despite the certain economic difficulties which the country managed to successfully face up, as well as raised new international investments, for several recent seasons Egypt started actively developing, especially in the sphere of the agricultural market.

Therefore, APK-Inform Agency presents the agricultural profile of Egypt before beginning of the international conference Middle East Grains & Oils Congress, to be held on March 11-12, 2019, in Cairo.

 

Grain segment

Wheat

According to the USDA forecasts, in 2018/19 MY wheat production in Egypt will reach almost 8.5 mln tonnes. At the same time, the consumption of wheat in the country will total 20.1 mln tonnes, up 1.5% compared with the previous season level (19.8 mln tonnes), which will become the maximum results for 5 recent seasons, due to the growth of the population, as well as the need to provide the population with subsidized bread, because the unemployment figures in the country is quite high, and the poverty rate already reached almost 28% of the economically active population, according to the recent official estimations of the World Bank.

Therefore, Egypt will remain the largest country-importer of wheat, and in 2018/19 MY the purchases will reach 12.5 mln tonnes of the grain, up 1.62% compared with the season-2017/18 (12.3 mln tonnes).

 

Trading with the Black Sea countries

It should be noted that one of the specific features of 2018 (January-December) was that Egypt significantly increased wheat imports from Russia, which strengthened its dominating role in tenders of the General Authority For Supply Commodities (GASC). Within frames of nearly 80% of GASC tenders, Egypt purchased Russian wheat, primarily due to the attractive price situation of the grain of Russian origin. At the same time, the GASC purchased wheat of exclusively Russian origin within 9 of 26 reporting tenders. Also, in 2018 the GASC purchased wheat from Romania, Ukraine and the USA. In turn, in the reporting year the GASC did not purchase French wheat, and the offers for the supply of the European grain demonstrated rather inactive rates at the tenders.

However, at the end of January 2019 at the GASC tender, Egypt was not interested in purchasing of Russian wheat, due to the growth of grain prices. In particular, Egypt received a number of offers of the Russian grain at the prices within the range of 255-260 USD/t FOB. Therefore, for the first time in 1.5 recent years the importer contracted a wheat batch from France, which was cheaper than the Russian grain at the reporting tender — 247-249 USD/t FOB.

 

 

 

 

GASC: wheat import requirements

In February 2018, the GASC set the limits on fees for vessel demurrage (monetary recovery of losses to the carrier, for the vessel demurrage in the lay days). Under the new conditions, the suppliers had to pay for the demurrage for the first 12 days by 12 thsd USD per day. In addition, the Agency reduced its requirements for the minimum protein content in wheat from 12% to 11.5%, for the grain imported from the key countries-suppliers — Russia, Romania and Ukraine. For French wheat and soft wheat from the USA, the figures reduced from 11.5% to 11%, for hard US wheat — from 12.5% to 12%.

In addition, Egypt has the requirements for realization of the close monitoring of the phytosanitary standards in terms of wheat importing to the country. In particular, from time to time Egypt brings up the issue of revision of the ergot content in wheat, and according to the recent established standards the figures should not exceed 0.05%.

Also, in September 2018 Egypt imposed the requirements for the complete preventing of pest contamination of wheat.

According to the FAO figures, the GASC provided nearly 50% of wheat imports from the total supply of the grain to Egypt. In addition, the Agency purchases wheat from domestic farmers at the fixed prices, in order to guarantee the income of farmers, and specify their plans for the planting campaign in the following season, as well as for formation of the grain stocks for its further processing and production of food products, and their following sales to the population at the subsidized prices.

According to the FAO forecasts, in 2018/19 MY the GASC can purchase 6.8-7 mln tonnes of wheat at tenders, which exceeds the previous season volumes (6.6 mln tonnes), and the figures in 2016/17 MY (5.8 mln tonnes).

 

Supply and demand balances of wheat in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Beginning stocks, `000 tonnes

             4 130  

             4 336  

             4 607  

             3 991  

             4 318  

Harvested areas, `000 ha

             1 350  

             1 260  

             1 260  

             1 320  

             1 320  

Yield, t/ha

6,15

6,43

6,43

6,40

6,40

Production, `000 tonnes

             8 300  

             8 100  

             8 100  

             8 450  

             8 450  

Imports, `000 tonnes

           11 300  

           11 925  

           11 175  

           12 407  

           12 500  

Total supply, `000 tonnes

           23 730  

           24 361  

           23 882  

           24 848  

           25 268  

Total consumption, `000 tonnes

           19 100  

           19 200  

           19 400  

           19 800  

           20 100  

Ending stocks, `000 tonnes

             4 336  

             4 607  

             3 991  

             4 318  

             4 568  

* Hereinafter, the forecast

Hereinafter, the source: USDA

 

Corn

Also, Egypt is the net importer of corn. In 2018/19 MY, the grain imports can increase to 9.5 mln tonnes, against 9.4 mln tonnes in 2017/18 MY. According to experts, in 2018 the country purchased the major volumes of corn from Argentina, Ukraine and the USA.

As for the production figures, the estimations of corn harvest in 2018/19 MY total 6.8 mln tonnes (up 6% y-on-y). The government makes all measures to increase the grain production, and purchases the better seed material with high yield figures, as well as increases the purchasing prices for the grain, to stimulate domestic producers.

In 2018/19 MY, the domestic consumption of corn can increase to 16.1 mln tonnes, up 1.25% compared with the previous season, due to the increased demand of the livestock industry for the grain of domestic production.

In 2018, MARL simplified the system of contracts placement between corn producers and poultry farms. In particular, under the contract terms poultry farmers have to buy the grain on the domestic market at the fixed price of 3.8 thsd EGP/t (212.8 USD/t).

 

Supply and demand balances of corn in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Beginning stocks, `000 tonnes

             2 463  

             2 358  

             2 224  

             1 887  

             1 841  

Harvested areas, `000 ha

745

750

750

800

850

Yield, t/ha

8

8

8

8

8

Production, `000 tonnes

             5 960  

             6 000  

             6 000  

             6 400  

             6 800  

Imports, `000 tonnes

             7 839  

             8 722  

             8 773  

             9 464  

             9 700  

Total supply, `000 tonnes

           16 262  

           17 080  

           16 997  

           17 751  

           18 341  

Total consumption, `000 tonnes

           13 900  

           14 850  

           15 100  

           15 900  

           16 200  

Ending stocks, `000 tonnes

             2 358  

             2 224  

             1 887  

             1 841  

             2 131  

 

Oilseeds segment

Oilseeds

Egypt produces peanuts, cottonseed, soybeans and sunflower seed. According to the USDA, the country is able to fully supply the domestic consumption with peanuts and cottonseed owing to the domestic production.

In particular, for 7 recent seasons the production of peanuts totals nearly 205 thsd tonnes per season, herewith the domestic consumption increased from 2010/11 MY to its maximum level in 2017/18 MY.

Speaking of cottonseed, in 2017/18 MY the production significantly increased — to 137 thsd tonnes, as opposed to 91 thsd tonnes in the previous season, and all the produced volumes are completely consumed.

The production of soybeans and sunflower seed is considerably lower compared with two previous crops, and in 2018/19 MY the volumes is expected at 25 thsd tonnes and 19 thsd tonnes, respectively.

At the same time, the consumption of soybeans this season can reach the record high — 2.8 mln tonnes, which is 16.6% higher year-on-year to the increase of the oilseed processing. In particular, the processing capacity totals 8.48 thsd tonnes of soybeans per day. Consequently, Egypt can import 2.8 mln tonnes of soybeans. We should note that in 2017 the USA (1.1 mln tonnes), Ukraine (511 thsd tonnes), Argentina (507.5 thsd tonnes) and Brazil (110 thsd tonnes) were the largest suppliers of oilseeds to the country.

 

Supply and demand balances of soybeans in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Beginning stocks, `000 tonnes

                   65  

                   45  

                178  

                   76  

                114  

Production, `000 tonnes

                   25  

                   25  

                   25  

                   25  

                   25  

Imports, `000 tonnes

             1 947  

             1 300  

             2 115  

             3 255  

             3 350  

Processing, `000 tonnes

             1 950  

             1 150  

             2 200  

             3 200  

             3 300  

Total supply, `000 tonnes

             2 037  

             1 370  

             2 318  

             3 356  

             3 489  

Total consumption, `000 tonnes

             1 992  

             1 192  

             2 242  

             3 242  

             3 342  

Ending stocks, `000 tonnes

                   45  

                178  

                   76  

                114  

                147  

 

Supply and demand balances of sunflower seed in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Beginning stocks, `000 tonnes

8

12

17

11

4

Production, `000 tonnes

17

17

17

19

19

Imports, `000 tonnes

57

63

62

74

65

Processing, `000 tonnes

60

65

75

90

75

Total supply, `000 tonnes

82

92

96

104

88

Total consumption, `000 tonnes

67

72

82

97

82

Ending stocks, `000 tonnes

12

17

11

4

3

 

Speaking of sunflower seed consumption, in 2018/19 MY it can reach 75 thsd tonnes (for processing) and 15 thsd tonnes for food use. In 2017/18 MY, Egypt imported sunflower seed from China.

 

Oilseed by-products

Despite the increase of the oilseed processing, the most consumable among others are palm oil (54.8%), soybean oil (34.1%) and sunflower oil (20.1%).

Of course, Egypt as many other countries imports palm oil, and in 2018/19 MY the country plans to purchase 980 thsd tonnes of the oil (up 8.8% y-o-y), due to the increase of the domestic consumption to 1.5 mln tonnes.

 

Supply and demand balances of palm oil in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Beginning stocks, `000 tonnes

                143  

                273  

                206  

                224  

                189  

Imports, `000 tonnes

             1 489  

             1 038  

             1 323  

             1 250  

             1 300  

Total supply, `000 tonnes

             1 632  

             1 311  

             1 529  

             1 474  

             1 489  

Total consumption, `000 tonnes

             1 350  

             1 100  

             1 300  

             1 280  

             1 300  

Ending stocks, `000 tonnes

                273  

                206  

                224  

                189  

                184  

 

Supply and demand balances of soybean oil in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Beginning stocks, `000 tonnes

127

165

50

33

57

Production, `000 tonnes

351

209

400

582

600

Imports, `000 tonnes

480

674

246

227

250

Total supply, `000 tonnes

958

    1 048  

696

842

907

Total consumption, `000 tonnes

752

960

610

760

810

Exports, `000 tonnes

41

38

53

25

50

Ending stocks, `000 tonnes

165

50

33

57

47

 

In the current season, the imports of soybean oil is forecasted to reach 400 thsd tonnes (up 50 thsd tonnes y-o-y) because of the increase of the demand from the domestic market and the total consumption of oil which is expected at 780 thsd tonnes (up 2.8% y-o-y). Herewith, the country in 2018/19 MY is to increase its own domestic production of soybean oil that can grow by 16.4% to 530 thsd tonnes.

Speaking of sunflower oil, the domestic production is going to be this season nearly 31 thsd tonnes whereas consumption of the product is expected at 460 thsd tonnes. Thus, the imports of sunflower oil to Egypt can reach 450 thsd tonnes.

 

Supply and demand balances of sunflower oil in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Beginning stocks, `000 tonnes

148

82

20

37

34

Production, `000 tonnes

25

27

31

37

31

Imports, `000 tonnes

277

331

592

480

480

Total supply, `000 tonnes

450

440

643

554

545

Total consumption, `000 tonnes

350

390

580

500

490

Exports, `000 tonnes

18

30

26

20

20

Ending stocks, `000 tonnes

82

20

37

34

35

 

Also, Egypt produces cottonseed oil and the volumes of the product are sufficient to satisfy the domestic consumption (the production and consumption in 2017/18 MY totaled 21 thsd tonnes each).

The production of soybean meal in 2018/19 MY can increase by 16.6% to 2.2 mln tonnes owing to the increase of processing of soybeans. Thus, the country will be able to substitute nearly 36.4% of the imported soybean meal this season, which is expected to reach 880 thsd tonnes (down 320 thsd tonnes y-o-y).

At the same time, the production of sunflower meal in the current MY is not going to change and will reach 41 thsd tonnes. In its turn, it is forecasted that the consumption of the product will increase by thsd tonnes to 195 thsd tonnes owing to the growth of soybeans import from China. THe import of soybean meal can also increase by 5 thsd tonnes to 155 thsd tonnes.

 

Supply and demand balances of soybean meal in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Production, `000 tonnes

             1 540  

                909  

             1 739  

             2 530  

             2 609  

Imports, `000 tonnes

             1 078  

             2 174  

             1 053  

                571  

                825   

Total supply, `000 tonnes

             2 686  

             3 117  

             3 057  

             3 176  

             3 458  

Total consumption, `000 tonnes

             2 650  

             2 850  

             2 980  

             3 150  

             3 400  

 

Supply and demand balances of sunflower meal in Egypt

 

2014/15

2015/16

2016/17

2017/18

2018/19*

Production, `000 tonnes

33

36

41

50

41

Imports, `000 tonnes

110

97

137

160

100

Total supply, `000 tonnes

179

162

210

220

151

Total consumption, `000 tonnes

150

130

200

210

140

 

Governmental regulation

Egypt imports oilseeds (soybeans, sunflower seed, flaxseed, sesame seed) at zero import tax. The import tax on oilseed meals totals 5%. The import tax on crude and refined soybean and sunflower oil totals 2%. At the same time, there is no import tax on cottonseed and palm oils.

Also, vegetable oils are concluded to the governmental subsidy program and are available for the vulnerable members of population at subsidized prices. In particular, in 2018 the government set the price for the bottle of sunflower oil (0.8 l) at 20 Egyptian pounds (EGP) while the market price is 22 Egyptian pounds (EGP) and for mix of oils at 14 EGP with the market price at 15 EGP.

Only the GASC contracts the crude vegetable oils on the global market. After the contracting the oils are refined on the governmental or private plants on the contract basis. It should be noted that 1.25 mln tonnes of refined oil are allocated for the subsidy program.

 

Ekaterina Mudriyan, APK-Inform Agency

 

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