EXCLUSIVE About 300,000 T of wheat bought by Egypt blocked in Ukraine – trade

Ears of wheat are seen in a field near the village of Zhovtneve, Ukraine, July 14, 2016. REUTERS/Valentyn Ogirenko/

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CAIRO, May 17 (Reuters) – About 300,000 tonnes of Ukrainian wheat reserved by Egypt’s national grain buyer for delivery in February and March has yet to be dispatched, with one cargo stuck in port and four more to be loaded , said four traders.

Egypt’s General Authority for Commodity Supply (GASC) has granted an extension to secure shipments, but does not offer trading companies any force majeure release from contractual obligations, traders said.

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

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Egypt, generally the world’s largest wheat importer, was heavily dependent on wheat shipments from the Black Sea which were cut short by the Russian invasion of Ukraine on February 24.

The war has raised concerns about Egypt’s ability to maintain strategic reserves and obtain affordable wheat that is used to make heavily subsidized bread accessible to nearly two-thirds of the population.

Egypt’s prime minister said this week that the government had four months’ wheat reserves. Traders say any wheat purchased is counted in the country’s strategic reserves, even if it has not yet been delivered. The GASC imported 4.7 million tonnes of wheat last year.

Two of the cargoes yet to be loaded were contracted by Nibulon and two others by Inerco, traders said. A fifth cargo contracted by Olam is stuck at the Ukrainian port of Chornomorsk on a GTCS vessel.

All shipments were purchased before the Russian invasion.

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

Three traders familiar with the matter said that despite the halt in shipments of Ukrainian wheat caused by the war, the GASC demanded the delivery of the four shipments of wheat unloaded, if necessary from other origins.

The GASC tender book contains no force majeure provisions, although one trader said the Grain and Free Trade Association (GAFTA), an international trade group, could arbitrate such cases.

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

The GASC has only bought foreign wheat once since the start of the war in Ukraine, buying mainly French grain in April at a higher price than it had paid before.

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Reporting by Sarah El Safty in Cairo, Nadine Awadalla and Maha El Dahan in Dubai; Written by Aidan Lewis; edited by David Evans and Marguerita Choy

Our standards: The Thomson Reuters Trust Principles.

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