Russia’s grain policies help Ukraine secure sales

Russia's curbs on wheat exports have inadvertently helped Ukraine secure lucrative sales to Egypt this week while also inflating prices for the world's top importer, traders said. (Reuters/File)

• Egypt’s state grains buyer GASC bought 290,000 metric tons of wheat
• Russia was kept out of the sale due to unofficial policies to prevent a price spike at home as the country seeks to combat inflation partly fueled by military spending

HAMBURG/CAIRO: Russia’s curbs on wheat exports have inadvertently helped Ukraine secure lucrative sales to Egypt this week while also inflating prices for the world’s top importer, traders said.
Egypt’s state grains buyer GASC bought 290,000 metric tons of wheat in an international tender on Monday. The purchase included 120,000 tons from Ukraine as well as 120,000 tons from Romania and 50,000 tons from Bulgaria.
Russia, the world’s top wheat exporter and Egypt’s most important supplier, was kept out of the sale due to unofficial policies to prevent a price spike at home as the country seeks to combat inflation partly fueled by military spending.
The restrictions, mostly not officially announced, include a minimum export price, export taxes and limiting sales of Russian grain by foreign trading houses.
“Had Russian exporters been allowed to offer realistic market prices, which would be much lower, I think they would have pretty much wiped up the Egyptian sale,” one trader said.
“The Russian moves are making Ukrainian supplies look more attractive, especially to importers in a difficult financial state like Egypt,” the trader added.
Russia’s agriculture ministry did not immediately respond to a request for comment on whether government grain export policies had led to the loss of business to Ukraine at this week’s Egyptian tender.
A trader in Ukraine said the Russian restrictions had provided more opportunites although the country had already realized about 60 percent of its potential sales this year.
“The cheapest supplier is leaving, so it’s probably not who wins but who loses,” the trader said, referring to how Russian policies could raise the cost of wheat for importers.
Hesham Soliman, a trader in Egypt, said Russia was holding off waiting for prices to rise and profitability to increase.
“This isn’t just about Russian export restrictions. Russia knows it controls the market and is acting accordingly,” he said, adding Egypt’s state buyer had pushed back by purchasing Black Sea wheat from other sources.
Noamany Nasr, a former adviser to Egypt’s supply ministry, said Russia frequently introduced subtle barriers to curb its own exports, whether to raise prices or for internal reasons.
“Ironically, this benefits Russia’s competitors.”
Egypt’s supply ministry said on Tuesday that after the purchase it now has strategic reserves for five months of consumption although traders expect it will need to secure additional supplies in coming months.
“There’s still supply in Romania where farmers have been holding onto a lot of their crop,” another European trader said.
“In Bulgaria, supply is gradually getting tighter. In Ukraine, there’s not a huge amount left, though they haven’t been shipping as vigorously as the Russians.”