USD shortages: A million tonnes of wheat blocked in Egypt's seaports

By Al Mayadeen English
Source: Agencies
4 Oct 2022 20:19

Dollar shortages in the country have impeded Egypt's access to wheat.

Alexandria's Port

Almost a million tonnes of wheat is blocked in Egyptian seaports due to the shortage of US dollars in the country, according to a member of the Chamber of Cereals Industry to Sputnik.

"Some 800,000-900,000 tonnes of wheat has accumulated in Egyptian ports over the past three weeks. We expect this cargo to be released, which is impossible for now because of a dollar shortage," Walid Diab said.

As of recent, Cairo has been increasing its spending on imports as well as international commitments especially during the COVID-19 pandemic, after racking up $45 billion in net foreign reserves in 2020, with dollar reserves shrinking by $33.1 billion during the summer.

The shortage in USD in Egypt has ramped up the prices of bread, which is unsubsidized, in addition to other baked goods, increasing the prices of corn and soy. This created a domino effect in animal feed, meat, and poultry markets, according to Diab.

The cereals chamber has notified the ministries of finance and supply about the wheat imports hold-up. However, Diab blames the Central Bank of Egypt which is solely in charge of managing the dollar resources in the country.

"The central bank’s regulatory easing allowed us to conclude contracts and ship goods to the ports. Now we need dollars to claim them," the official explained.

By the end of September, the central bank recorded that the Egyptian pound fell to a record low against the US dollar, trading at 19.6 pounds per dollar.

The previous record was set in December 2016 at 19.56 pounds per dollar.

Egypt has also been taking the brunt of the Ukraine crisis, suffering $7 billion in losses as of May.

About 42% of Egypt's grains are imported from Russia or Ukraine, and 31% of all tourists in the country are Russians and Ukrainians, according to the minister. However, Cairo has been seeking alternative suppliers of grain while attempting to attract visitors from different countries.

Ukraine and Russia, which share the Black Sea, are the world's breadbasket: they provide collectively 28% of global wheat exports. Russia and Belarus, in parallel, provide 40% of potash, an important fertilizer. Countries dependent on imports, particularly poor countries, are the first victims of this downfall as grain and corn prices are on an increase.