Russia's invasion of Ukraine closed the countries of the Middle East and North Africa from access to Black Sea grain. The hostilities have brought shipments from Ukrainian ports to a halt and financial sanctions have cast doubt on payments for Russian wheat, adding another risk to governments in the MENA region already struggling with increased import costs, economic crises or conflicts.

This assessment is given by traders and bankers, according to Refinitiv Agriculture.

“Everyone is looking for other supply options as it becomes more difficult to buy grain in Ukraine or Russia,” says one trader, citing disruptions in the supply chain, increased sanctions and rising insurance premiums.

“The market does not expect a recovery in Ukrainian and Russian exports until the fighting stops,” another trader notes.

While the Gulf states are protected by budget surpluses, other MENA countries, including Egypt and Lebanon, "remain among the most vulnerable in the world, given dependence on wheat imports and high household spending on food," says chief economist at Abu Dhabi Commercial Bank Monica Malik.

Egypt: wheat prices up 23%

Egypt, the world's biggest importer, sourced 80% of its wheat from Russia and Ukraine last year, traders said. But after Russia invaded Ukraine, its state grain buyer canceled two tenders due to lack of offers and high prices, and two shipments got stuck in Ukrainian ports.

Egyptian officials say there are enough wheat stocks and future own crops to supply the subsidized bread for about 9 months. But they already expect to pay an additional $950 million from the budget due to higher prices and may face a reduction in strategic reserves.

Egypt's commercial bread market could be more at risk due to destocking, traders said. According to the Cairo Chamber of Commerce, prices for local wheat and flour have risen by 23% and 44%, respectively, since the start of the Russian invasion.

Algeria: Will have to pay 40% more for wheat

Algeria - another big buyer - says it has enough grain stocks to last the rest of the year, but is resuming imports of French wheat.

"Importers will have to pay an average of 40% more for wheat than before the invasion," traders said.

Lebanon: stocks of wheat will last for a month

Lebanon, facing one of the worst economic crises in modern history, only had one month's worth of wheat when Russia invaded Ukraine.

In Tunisia, declining bread stocks, flour rationing in stores and problems with wheat imports have raised doubts that stocks will last until the summer.

In Syria, whose economy has been ravaged by years of conflict, the government can rely on reserves, but spending will rise.

“There is local wheat, they will try to produce more, but of course there is a problem. Some people will go hungry,” says a seller from Syria.

There are indications that some European countries may restrict grain exports after Hungary announced an immediate export ban.

“The difficult situation is in Egypt, Morocco and Lebanon, suffering a double whammy due to reduced supply from the Black Sea region and higher prices,” said Ahmed Morsi, senior analyst at the American Eurasia Group.

AgroPortal.ua