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

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About 300,000 tonnes of Ukrainian wheat ordered by Egypt’s state grains buyer have yet to be shipped, with one cargo stuck in port and four others to be loaded, traders have said.

The cargos were due for delivery in February and March.

Egypt’s General Authority for Supply Commodities has granted an extension to secure the wheat, but is not offering trading companies any force majeure release from their contractual obligations, according to traders.

Force majeure is a clause 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 until supplies were disrupted by Russia’s invasion of Ukraine on February 24.

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. According to traders, any wheat that has been purchased is counted within the country’s strategic reserves, even if it has not been delivered.

Two of the cargos 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 five were purchased before Russia’s invasion.

Egypt’s supply minister confirmed on Sunday that authorities had granted an extension for delivery of the wheat, but could not immediately be reached for further comment.

Three traders with knowledge of the issue said that, despite the war halting wheat shipments, the General Authority for Supply Commodities was requiring the delivery of the four unloaded cargos – if necessary from other origins.

The general authority’s tender book contains no provision for force majeure, though one trader said the Grain and Free Trade Association, an international group, could arbitrate such cases.

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

Egypt 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.