Grain Markets On Edge Over Egypt

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Grain markets are keeping a close eye on the tense situation in Egypt as thousands of protestors continue to demand that President Hosni Mubarak give up power.

Tuesday brought the largest anti-government protests yet with reports indicating upwards anywhere from 100,000 to 200,000 people gathering in Cairo's Tahir Square. There is uncertainty over how the situation will affect grain demand.

According to Bloomberg News, Egypt’s newly appointed finance minister said on Tuesday that importers of staple foods would be granted a temporary waiver on import duties. The suspension of tariffs could boost Egyptian food purchases.

The minister said his country is "not close to the tipping point" and promised that cash shortages resulting from days of anti-government protests will begin easing this week.

There are also indications concerns over the turmoil in Egypt are spurring further buying of grain and other food goods by governments in the Middle East and North Africa.

A senior executive of Cargill Inc. said the company has seen more buying and stockpiling of food commodities in the Maghreb region (North Africa) alongside the Egypt unrest.

"We have seen in some countries additional buying going on," Roger Janson, Cargill's assistant vice president of grain and oilseeds supply chain for Europe, told reporters on the sidelines of a world food conference.

He said there has been no major trade disruption from the situation in Egypt and said crop shortfalls in the region may also be contributing to the stockpiling. "You risk mixing up these two elements," he said.

However, grain traders remain nervous about disruptions in shipments to Egypt and the potential for disruptions to world oil supplies if the situation worsens.

Egyptian officials say wheat imports continue to arrive normally, but shipping sources indicate that cargo operations at Egypt's Alexandria and Damietta ports have come to a virtual standstill as widespread unrest is keeping key staff from work.

"Alexandria port is still open but no one is working for the moment," an Egyptian shipping source told Reuters News Service on Tuesday. "Their cargo operations are not working properly because of labor problems."

Sources identified similar problems at Damietta port with ship container operations being disrupted at Port Said, as well. A French trader said a ship he had chartered to export an agricultural cargo to Egypt was circling close to the port of Damietta because he was afraid of not being paid by the private Egyptian buyer.

A source with a large grain company in the U.S. told Reuters he was not loading two Panamax vessels with wheat for Egypt because of problems related to letters of credit from Egyptian banks. Egyptian banks have been closed since Jan. 27 and will remain closed through Thursday, the end of the country’s work week.

Movement of traffic through the Suez Canal has not been affected so far. The Egyptian military has increased deployments at the canal and other strategically important sites such as the Sumed oil pipeline which links the Red Sea to the Mediterranean.

 

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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