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About 300,000 tonnes of wheat bought by Egypt stranded in Ukraine

A worker rest on sacks of processed wheat at a wholesale grain market on May 17, 2022 [Amarjeet Kumar Singh/Anadolu Agency]
A worker rest on sacks of processed wheat at a wholesale grain market on May 17, 2022 [Amarjeet Kumar Singh/Anadolu Agency]

About 300,000 tonnes of Ukrainian wheat booked by Egypt's state grains buyer for delivery in February and March is yet to be shipped, with one cargo stuck in port and four others still to be loaded, four traders said and Reuters reports.

Egypt's General Authority for Supply Commodities (GASC) has granted an extension to secure the cargoes but is not offering trading companies any force majeure release from contractual obligations, according to traders.

Force majeure is a clause in contracts that frees parties from liability due to uncontrollable events.

Egypt, typically the world's largest wheat importer, depended heavily on shipments of Black Sea wheat that were disrupted by Russia's invasion of Ukraine on 24 February.

Russian President Vladimir Putin's recognised two breakaway territories in Eastern Ukraine - Cartoon [Sabaaneh/Middle East Monitor]

Russian President Vladimir Putin's recognised two breakaway territories in Eastern Ukraine – Cartoon [Sabaaneh/Middle East Monitor]

The war has raised concerns over Egypt's ability to sustain its strategic reserves and secure affordable wheat that is used to make steeply subsidised bread available to nearly two-thirds of the population.

Egypt's Prime Minister said this week that the government had wheat reserves to last four months. Traders say that any wheat that has been purchased is counted within the country's strategic reserves, even if it has not yet been delivered. GASC imported 4.7 million tonnes of wheat last year.

Two of the cargoes that have yet to be loaded were contracted by Nibulon and a further two by Inerco, traders said. A fifth cargo contracted by Olam is stuck at Ukraine's Chornomorsk Port on a GTCS ship.

All cargoes were purchased before Russia's invasion.

READ: Saudi Arabia, Oman assure citizens of sufficient wheat supplies amid global shortages

Egypt's Supply Minister confirmed on Sunday that authorities had granted an extension for delivery of the cargoes, adding on Tuesday that they were in talks with suppliers on trying to get the four cargoes by rail to Poland.

Three traders with the knowledge of the matter said that, despite a halt to shipments of Ukrainian wheat exports caused by the war, GASC was requiring the delivery of the four unloaded wheat cargoes, if necessary from other origins.

GASC's tender book contains no provision for force majeure, though one trader said the Grain and Free Trade Association (GAFTA), an international trade group, could arbitrate such cases.

With Ukraine's ports blocked off by Russia's invasion, it has been forced to send shipments across its western border, relying on limited railroad capacity and small Danube river ports.

GASC has purchased foreign wheat just once since the start of the war in Ukraine, buying mainly French grain in April at a higher price than it had paid previously.

READ: Egypt takes extra precautions to prevent economic crisis sparking uprising

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AfricaEgyptEurope & RussiaNewsRussiaUkraine
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