Egypt in talks for Abu Dhabi Bank loan to finance Kazakhstan wheat purchases

In pursuit to seek cost-effective alternative to Russian grain
Egypt in talks for Abu Dhabi Bank loan to finance Kazakhstan wheat purchases
Wheat harvesting (Photo from Reuters)

According to three traders who spoke to Reuters, Egypt is currently in discussions with an Abu Dhabi-based bank regarding a loan facility that would be used to finance wheat purchases from Kazakhstan. This potential agreement could provide Egypt with a cost-effective alternative to Russian grain, which has been a significant supplier of wheat to Egypt but recently blocked a purchase below an unofficial price floor for wheat. Egypt, as one of the largest global buyers of wheat, has been attempting to reduce its import expenses due to a shortage of foreign currency, which has resulted in deferred wheat payments.

The negotiations for the loan deal with Kazakhstan are still in the early stages, and the discussions involve determining the price, quantities of wheat, and the loan’s value. The source familiar with the talks did not disclose the name of the Abu Dhabi-based bank involved. Traders learned about the potential deal during a wheat tender conducted by Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC).

Read more: Egypt’s trade deficit drops to $2.32 bn in June

During the tender, GASC was reportedly negotiating a price lower than Russia’s unofficial price floor, which was believed to be set at $270 per metric ton. However, the traders expressed skepticism about the feasibility of the deal, citing logistical challenges in shipping wheat from Kazakhstan, which would require overland deliveries through other countries.

GASC did not provide any comment on the matter when requested. The unofficial price floor has been a hurdle for both GASC and Russian wheat suppliers, as it aims to curb wheat exports and prevent domestic supply shortages that could lead to higher bread prices.

480,000 tons

Recently, Russia’s agriculture ministry blocked the private sale of 480,000 tons of Russian wheat to Egypt due to it being sold below the price floor. As a result, Egypt will now source wheat from other origins such as France and Bulgaria. Egypt’s finance ministry expects the cost of food subsidies, primarily for bread, to increase by 41.9% to 127.7 billion Egyptian pounds ($4.14 billion) in the current fiscal year.

$500 million

While Kazakhstan is already an approved wheat import origin for Egypt, actual purchases from the Central Asian country are infrequent. Notably, Egypt also signed a $500 million loan agreement with the Abu Dhabi Exports Office (ADEX) to purchase imported wheat from UAE-based agribusiness Al Dahra.

Egypt wheat

First grain ship arrives since Russian withdrawal from Black Sea agreement

On Thursday, the first grain ship to depart from a Ukrainian port since Russia’s withdrawal from a significant Black Sea agreement in July successfully arrived at Türkiye’s Bosporus Strait. However, Ankara has shown reluctance in pursuing alternative agreements that exclude Moscow.

According to the Marine Traffic website, the cargo ship named Resilient Africa, which flies the flag of Palau, reached Turkey’s Bosporus Strait at approximately 4:20 p.m. local time. The strait serves as a link between the Black Sea and the Mediterranean Sea. The vessel set sail from Ukraine’s Odesa port situated in the Black Sea region, where tensions between Russian and Ukrainian forces have escalated following Russia’s decision not to extend the grain deal. This agreement had previously facilitated safe travel for cargo ships to and from Ukraine. Unfortunately, no details were provided regarding the destination of the ship.

On Wednesday, Kyiv made an announcement regarding the departure of the ship from the Odesa port. The Development and Infrastructure Minister of Ukraine, Oleksandr Kubrakov, stated that the vessel is transporting over 3,000 tons of wheat. Additionally, he mentioned that another ship, also loaded with wheat, has arrived at Odesa and is currently awaiting departure to Egypt.

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