Egypt wants to purchase grain from Kazakhstan

According to Reuters, the government of Egypt is negotiating with a bank in Abu Dhabi as it wants to obtain a credit line to finance purchases of wheat from Kazakhstan.

Why does Egypt want the new deal? The new agency believes that Egypt is seeking a cheaper alternative for Russian grain, which it has mostly been importing since last year. Moreover, Egypt is trying to cut its import expenditures because the country is struggling with a shortage of foreign currency.

What is the deal’s status? As the media outlet reported, citing its source, the two sides are negotiating the price, the amount of grain and the cost of a loan. No details on the bank in Abu-Dhabi were given, though.

Potential obstacles. According to undisclosed sources of the media outlet, the deal isn’t inevitable due to complex logistics for the grain from Kazakhstan.

Kazakhstan is already on the list of countries the government of Egypt has approved for supplying wheat. However, purchases from this Central Asian country are rare.

In addition, Egypt has recently signed a $500 million agreement with the Abu Dhabi Exports Office (ADEX) on purchasing wheat from Al Dahra, an agricultural company based in the UAE.

As Kazakhstan’s official data shows, in 2022, the country exported three million tons of wheat to Uzbekistan (47.1% of all wheat exported by the country last year), 986,700 tons to Tajikistan (15.5%) and 686,700 tons to Afghanistan (10.8%). Given that Kazakhstan doesn’t share a border with Tajikistan or Afghanistan, the export to these countries goes through Uzbekistan. For example, Afghanistan receives grain by the only 75-kilometer railway from Hairatan to Mazar-i-Sharif.

Global prices for grain sharply surged right after the start of the Russian invasion of Ukraine as these countries are the two biggest exporters of grain in the world. However, grain prices slightly decreased in 2022 when Russia reported a record-high yield in wheat.

Over the first six months of this year, Kazakhstan exported 6.3 million tons of grain, a 57% increase over the same period last year.

According to Kazakhstan Railways, more than one million tons of grain will be transported by the company monthly by the end of this year. The railway company is expected to transport roughly 12 million tons of grain, including 10 million tons headed for export this year in total. In terms of milled products, Kazakhstan Railways will ship three million tons, including 2.2 million tons for export.