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Egypt to halt flour subsidy and cut wheat imports by up to 10 pct

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CAIRO (Reuters) – Egypt, the world’s largest wheat buyer, will stop subsidising flour for its sweeping bread subsidy programme next month in a move expected to cut wheat imports by up to 10 percent by curtailing smuggling, the supply ministry said on Wednesday.

Egypt is looking to tighten its finances as it pushes ahead with a $12 billion three-year International Monetary Fund loan programme tied to ambitious reforms such as subsidy cuts and tax increases.

Austerity-hit Egyptians faced with inflation above 30 percent have increasingly turned to the state’s cheap subsidised bread to make ends meet, increasing the country’s food subsidy bill as well as its wheat imports. In the financial year to June 30 wheat imports reached 5.58 million tonnes, up from 4.4 million the preceding year.

In an attempt to reduce waste the state will next month stop subsidising flour used by bakeries offering the cheap bread. Instead, it will restrict subsidies to the actual bread offered to consumers, Supply Ministry spokesman Mohamed Sweed said.

Subsidy card holders currently obtain each loaf of bread for 0.05 pounds, less than a tenth of the cost of production, via an electronic smart card that allocates a maximum daily ration to citizens and compensates bakeries for the production cost shortfall with every swipe.

Unscrupulous bakers have long bought up cheap subsidised flour and sold it on the black market, costing the state millions of dollars a year in squandered subsidies.

Sweed said the new measure will remove the incentive for smugglng flour, cutting down on waste and helping to save the state up to 8 billion Egyptian pounds ($447 million) from its 2017-18 food subsidy bill, which had been set at 85 billion pounds.

He said that lower flour consumption would translate directly into reduced imports.

($1 = 17.9100 Egyptian pounds)


(Reporting by Eric Knecht; Editing by David Goodman)


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South Africa buys most U.S. wheat since 2011

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CHICAGO (Reuters) – South Africa made its biggest purchase of U.S. wheat in nearly five years last week, U.S. Department of Agriculture data showed on Thursday, as drought reduced African grain output and low prices made U.S. supplies attractive in global markets.

USDA said South Africa bought 45,000 tonnes of hard red winter wheat, a variety used primarily for milling bread flour. The sale, for delivery during the upcoming marketing season beginning on June 1, was the first purchase of that variety since 2012 and the largest one-week sale of any variety of U.S. wheat since the week ended July 14, 2011. [EXP/WHE] [USDA/EST]

“It’s unusual and interesting,” one U.S. trader said. “HRW (wheat) is quite price competitive, and will garner business.”

Traders have been looking for signs of increased grain imports in South Africa, with the El Niño weather pattern contributing to blistering drought that was likely to cut their maize harvest by 30 percent and winter wheat crop by 18 percent.

K.C. July wheat futures, which reflect the approaching U.S. winter wheat harvest, tumbled to a contract low of $4.41-1/4 per bushel last week, enticing some buyers. Total sales last week of U.S. HRW wheat for shipment in the 2016/17 season were 293,932 tonnes, a marketing season high.

U.S. hard wheat export premiums have gained as demand improved, and as rains in U.S. growing regions could potentially delay the earliest phases of the harvest.

South Africa could purchase more high-protein wheat if prices stay low, another U.S. wheat trader said. “It’s a one-off sale for now,” he added.


(Reporting by Michael Hirtzer; Editing by James Dalgleish)

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Egypt’s GASC says seeks wheat for April 25-May 5 shipment

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ABU DHABI (Reuters) – Egypt’s General Authority for Supply Commodities (GASC) set a tender on Wednesday to buy an unspecified amount of wheat from global suppliers for shipment from April 25-May 5.

Mamdouh Abdel Fattah, vice chairman of GASC, said the authority is seeking to buy cargoes of soft and/or milling wheat from the United States, Canada, Australia, France, Germany, Poland, Argentina, Russia, Kazakhstan, Ukraine and Romania.

Tenders should reach GASC by noon local time (1000 GMT) on Thursday. The results should come out after 3:30 p.m. local time on the same day. Wheat bids should be free-on-board, with a separate freight offer.

In its most recent tender on March 16, GASC bought 240,000 tonnes of wheat from France, Romania and Ukraine for April 15-24 shipment.

GASC is seeking to buy 55,000-to-60,000-tonne cargoes of the following:

U.S. North Pacific soft white wheat;

U.S. soft red winter wheat;

Russian milling wheat;

Ukrainian milling wheat, and

Australian standard white wheat.


GASC is also seeking 60,000-tonne cargoes of the following:

Canadian soft wheat;

French milling wheat;

German milling wheat;

Argentine bread wheat;

Polish milling wheat;

Kazakh milling wheat, and

Romanian milling wheat.


(Reporting by Maha El Dahan in Abu Dhabi, writing by Michael Hirtzer in Chicago; Editing by Chris Reese and Marguerita Choy)

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Egypt supply minister says close to wiping out graft in wheat sector

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CAIRO (Reuters) – Egypt’s supply minister said the world’s top wheat buyer is close to eradicating graft in its strategic sector, defending the country’s management of the system against criticisms that it is vulnerable to corruption.

He said authorities distribute 6 billion loaves of bread to citizens each month and that a smart card system rolled out in 2014 had virtually ended graft in the system.

Officials, traders and bakers who spoke to Reuters for a March 15 story on the wheat sector said reforms, including the smart card system, had failed and ended up fuelling more corruption.

Challenging the Reuters story, Supply Minister Khaled Hanafi repeated his assertions that the system has saved millions of dollars in bread subsidies, reducing imports, and ended shortages that once prompted long queues outside bakeries across the country.

“We have a system now that counts every single loaf of bread consumed,” he said in an interview.

A Reuters spokeswoman said the news agency stood by its story.

Wheat has become a key issue in recent months because the stability of Egypt’s supply chain has been threatened by an agricultural quarantine official’s zero-tolerance policy on ergot, a common fungus.

The policy caused a mass boycott of state wheat tenders. The quarantine official was removed from his position.

In 2014, President Abdel Fattah al-Sisi’s government rolled out a system of smart cards designed to stop unscrupulous bakeries selling government-subsidised flour on the black market.

Corruption had been close to eliminated, Hanafi said in the interview, because the smart card system is effective and allows the ministry to monitor flows of bread.

The stakes are high for Sisi, who has promised to end graft, including irregularities in the wheat industry. Wheat shortages have sparked riots in the past. When Egyptians revolted against autocrat Hosni Mubarak in 2011 one of their most potent chants was “Bread, freedom and social justice.”

The bread subsidy programme, which feeds tens of millions of poor Egyptians, is central to avoiding unrest.

Under the smart card programme, each family is provided with a plastic card enabling it to buy five small flat loaves of bread per family member a day.

Internal statistics produced by the Ministry of Supply and reviewed by Reuters suggest the problems with the smart card system were considerable.

Hanafi says the system is almost foolproof and that his ministry has kept corruption to a minimum, in contrast to the past, when he says 50 percent of Egypt’s flour supply was stolen.

“We are serving 80 million Egyptians. And we are serving 6 billion loaves of bread per month,” Hanafi said.”Any fraction, any tiny small fraction in absolute figures, could be relatively large. But as a percent it is nothing. It is less than even the normal level of error that exists.”


(By Michael Georgy. Editing by Simon Robinson, Veronica Brown and Dale Hudson)

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