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Egypt pledges to meet wheat needs as turmoil worsens

Source: Thomson Reuters Foundation - Tue, 29 Jan 2013 18:25 GMT
Author: Reuters
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* GASC'S Nomani: "I do not have financial problems."

* Traders note much slower buying activity year-on-year

* Currency crisis eyed as oil supply troubles intensify

By Shaimaa Fayed

CAIRO, Jan 29 (Reuters) - Egypt's state wheat buyer said on Tuesday that it would meet the debt-laden country's needs and did not have financial problems, adding there were enough stocks to last until June 22.

Egypt is facing increasing economic and political instability, with the pound having lost more than a tenth of its value since the 2011 revolution.

Egypt's army chief said political unrest was pushing the state to the brink of collapse.

Many Egyptians depend on the subsidised saucer-sized flat loaves selling for just 5 piastres (less than 1 U.S. cent) and any disruption to subsidised bread supplies could provoke further unrest.

International grain traders said normally brisk buying was markedly slower but Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC), said state wheat stocks of the world's top importer of the grain had been enhanced since early January when they were expected to last until June 17.

"Providing the country's needs, the Egyptian citizens' needs, is a red line," he told Reuters. "I do not have financial problems."

GASC has purchased two cargoes or 115,000 tonnes of wheat this month for shipment Feb. 20-28. [ID: nL5E9CACCR], but that is less than half of purchases made in January 2012 totalling 420,000 tonnes. [ID: nL6E8CD2L6] [ID: nL6E8C61UJ]

"They're one month behind and it's significantly less tonnage this January compared with last January," a European trader said.

OIL WOES

Egypt's currency crisis has intensified its oil supply troubles, as the weaker pound makes it more difficult for cash-strapped Cairo to buy vital crude for its refineries. The state oil company has found it increasingly difficult to procure letters of credit for transactions and costs are rocketing.

Grain traders were concerned that the problem could spread to the state wheat buyer.

"The currency is very weak and you see how much their (money) reserves have come down," said a European trader.

However, Nomani said of GASC's last wheat purchase: "The Egyptian finance ministry provided me with dollar guarantees at the central bank to finance the last tender."

The International Grains Council estimates the country will import 10 million tonnes this season compared with 11.7 million in 2011/12.

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