Wheat imports by Egypt will fall to a nine-year low next season, with those by Saudi Arabia falling too, as soaring prices prompt major wheat buyers to lift their own production and cap demand.
Egypt, the world’s biggest wheat importer, will ship in 8.0m tonnes of wheat in 2022-23 – a drop of 1.0m tonnes year on year, and the lowest figure since 2013-14, the US Department of Agriculture’s Cairo bureau said.
Saudi Arabia’s imports will fall by 200,000 tonnes to 2.80m tonnes, the second lowest since 2013-14, a separate briefing from the USDA’s Riyadh bureau said.
The reports attributed the declines to the jump in wheat prices, which was encouraging importers to raise domestic production, while too raising living costs and curtailing demand, with the Ukraine war also prompting logistical difficulties.
“The war between Russia and Ukraine is potentially aggravating already unsettled supply chains and causing major disruptions of wheat supplies to import destinations in the Middle East and North Africa region,” the Cairo bureau said.
The dip in Saudi imports in 2022-23, as start in July, will reflect “mainly… an expected substantial increase in local production”, the Riyadh bureau said, forecasting the country’s own output soaring by 300,000 tonnes year on year to 1.0m tonnes.
That would be the most in 11 years, since before the kingdom imposed short-lived constraints on output to conserve domestic water supplies.
“As a result of the war between Russia and Ukraine, Saudi Arabia is expected to increase local production to offset tight worldwide supplies,” the briefing said, noting that the government had this month raised its official wheat purchase price for the second time this season.
The latest increase took the purchase price to 1,700 Saudi riyals per tonne, the equivalent of more than $450 per tonne, up from the 1,306 riyals per tonne offered in 2021-22.
Egypt’s production in 2022-23 will grow by 800,000 tonnes to a record 9.80m tonnes, also spurred by government incentives including a higher purchasing price, and subsidies on fertilizers which sees wheat growers pay less than half the market price for nutrients.
Wheat area at harvest “is set to come in at 1.53m hectares, compared to 1.4m hectares the previous year”, USDA staff said.
Meanwhile, consumption will ease by 500,000 tonnes to 20.0m tonnes in the face of “an increase in the price” of bread and bakery products, also limiting the need for imports.
Egypt’s immediate quest for wheat has also been eased by the imminent start of the domestic harvest, which will add to a reported four months’ worth of stocks.
Egypt’s government has said it will not conduct any further wheat import tenders until late 2022.