Required Report - public distribution

**Date:** 3/8/2006

**GAIN Report Number:** EG6007

EG6007

**Egypt**

Grain and Feed

**Annual**

2006

**Approved by:**

![](media/image1.wmf)Asif J. Chaudhry

#### U.S. Embassy

**Prepared by:**

Fred Giles, Kurt Seifarth and Sherif Ibrahim

**Report Highlights:**

Egypt\'s total wheat imports are expected to remain around 7 MMT for MY
2005/06. U.S. market share continues to decline. Egypt\'s total corn
imports for MY 2005/06 are expected to decrease by approximately 26
percent. U.S. market share in MY 2004/05 is 10 percent lower than in MY
2003/04. In MY 2004/05, Egyptian rice exports are at record levels
reaching 1.06 MMT

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Cairo \[EG1\]

\[EG\]

Table of Contents

[Production 3](#production)

[Consumption 4](#consumption)

[Trade 5](#trade)

[Stocks 6](#stocks)

[Factors Affecting U.S. Trade 6](#factors-affecting-u.s.-trade)

[Production 7](#production-1)

[Consumption and Utilization 7](#consumption-and-utilization)

[Trade 8](#trade-1)

[Production 10](#production-2)

[Trade 11](#trade-2)

# 

+---------------------+-------+-------+-------+-------+------+-------+
| **Egypt**           |       |       |       |       |      |       |
|                     |       |       |       |       |      |       |
| ######## Wheat      |       |       |       |       |      |       |
|                     |       |       |       |       |      |       |
| ########            |       |       |       |       |      |       |
|  (Thousand Hectare) |       |       |       |       |      |       |
+---------------------+-------+-------+-------+-------+------+-------+
|                     |       | **2   |       | **2   |      | **2   |
|                     |       | 004** |       | 005** |      | 006** |
+---------------------+-------+-------+-------+-------+------+-------+
|                     | Old   | New   | Old   | New   | Old  | New   |
+---------------------+-------+-------+-------+-------+------+-------+
| **Market Year       |       | *     |       | *     |      | *     |
| Begin**             |       | *07/2 |       | *07/2 |      | *07/2 |
|                     |       | 004** |       | 005** |      | 006** |
+---------------------+-------+-------+-------+-------+------+-------+
| Area Harvested      | 1092  | 1094  | 1120  | 1260  | 0    | 1262  |
+---------------------+-------+-------+-------+-------+------+-------+
| Beginning Stocks    | 1744  | 1900  | 2464  | 2030  | 0    | 3214  |
+---------------------+-------+-------+-------+-------+------+-------+
| Production          | 6630  | 7177  | 6800  | 8184  | 0    | 8200  |
+---------------------+-------+-------+-------+-------+------+-------+
| TOTAL Mkt. Yr.      | 8150  | 6926  | 7500  | 7000  | 0    | 7000  |
| Imports             |       |       |       |       |      |       |
+---------------------+-------+-------+-------+-------+------+-------+
| Jul-Jun Imports     | 8150  | 6926  | 7500  | 7000  | 0    | 7000  |
+---------------------+-------+-------+-------+-------+------+-------+
| Jul-Jun Import U.S. | 1765  | 1680  | 0     | 1500  | 0    | 2000  |
+---------------------+-------+-------+-------+-------+------+-------+
| **TOTAL SUPPLY**    | **16  | **16  | **16  | **17  | *    | **18  |
|                     | 524** | 003** | 764** | 214** | *0** | 414** |
+---------------------+-------+-------+-------+-------+------+-------+
| TOTAL Mkt. Yr.      | 10    | 0     | 10    | 0     | 0    | 0     |
| Exports             |       |       |       |       |      |       |
+---------------------+-------+-------+-------+-------+------+-------+
| Jul-Jun Exports     | 10    | 0     | 10    | 0     | 0    | 0     |
+---------------------+-------+-------+-------+-------+------+-------+
| Feed Dom.           | 50    | 60    | 50    | 65    | 0    | 70    |
| Consumption         |       |       |       |       |      |       |
+---------------------+-------+-------+-------+-------+------+-------+
| TOTAL Dom.          | 14050 | 13973 | 14400 | 14000 | 0    | 14100 |
| Consumption         |       |       |       |       |      |       |
+---------------------+-------+-------+-------+-------+------+-------+
| Ending Stocks       | 2464  | 2030  | 2354  | 3214  | 0    | 4314  |
+---------------------+-------+-------+-------+-------+------+-------+
| **TOTAL             | **16  | **16  | **16  | **17  | *    | **18  |
| DISTRIBUTION**      | 524** | 003** | 764** | 214** | *0** | 414** |
+---------------------+-------+-------+-------+-------+------+-------+

# Production

Egyptian wheat is planted in October/November and harvested in
April/May. The total wheat area for MY 2005/2006 is estimated at
1,260,000 HA, 15 percent more than the 2004/2005 area. For MY 2006/2007,
Ministry of Agriculture experts forecast that the planted area rising
slightly above the 2005/06 level. According to official data from the
Ministry of Agriculture, total production for MY 2005/2006 is estimated
at 8,184,000 MT, compared to 7,177,000 MT for 2004/2005. This level of
production is higher than estimates given by the private sector, but
there are no other reliable sources to support the data. This increase
is due to the 15 percent increase in area planted. An increase in the
government procurement price for wheat makes it the most profitable
winter crop. Wheat area increased at the expense of clover and fava bean
areas. Fava bean plantings dropped from 168,000 HA in 2004/05 to 75,600
HA in 2005/06. In addition, farmers were intercropping wheat with
cotton. The government has increased the procurement price to LE 1,375/
MT (\$237) for the 2005/06 wheat crop. This is up from LE 1,208/ MT
(\$208 per MT) in 2004/05. This price is higher than the current Russian
and Ukrainian wheat prices (\$140/MT/ C&F or LE 820/MT).

The average yield for the MY 2004/2005 crop is estimated at 6.6 MT/HA
compared to 6.5 MT/HA in 2003/04. According to the Ministry of
Agriculture, all wheat areas are cultivated with new varieties (Gemmiza
7, Gemmiza 9, Sakha 93 and Giza 168), which have the potential to yield
7.6 MT/HA. The total quantity of locally produced wheat sold to the
Ministry of Industry and Foreign Trade in MY 2005/2006 was 2,**7**
million MT as compared to 1.7 million MT in 2004/05. From the 2006/07
crop, the General Authority for Supply Commodities (GASC) plans to
purchase 3.1 million MT.

## Consumption 

Egypt continues to have one of the highest per capita wheat consumption
levels in the world. Total consumption of wheat in MY 2005/2006 is
estimated at 14 MMT including nearly 7 MMT of imported wheat. Since the
beginning of MY 2005/06 (July 2005) through the end of February, the
Ministry of Supply (GASC) purchased 3.36 MMT of imported wheat and 2 MMT
of locally-produced wheat. It also purchased 500,000 MT of locally
produced white corn to mill 82 percent extraction flour used for the
subsidized baladi bread. The subsidy on baladi bread costs the
government close to LE 3.8 billion last year. During the same period,
private sector companies purchased 1.7 MMT of imported wheat to produce
72 percent extraction flour used in the production of high quality flat
bread and European type bread products, pastries and pasta. Most of the
domestic wheat crop is sold directly to consumers or retained by farmers
for on-farm consumption.

Per capita consumption of wheat in MY 2005/2006 is estimated at 186 Kg.
There are two reasons for the increasing wheat consumption. 1) the
current foreign exchange availability has led private and public sector
flour mills to import more wheat. And 2) lower-priced wheat from
nontraditional suppliers such as Russia and Ukraine, have flooded the
market. This led to decreases in wheat flour prices from LE 1,350 per MT
to LE 1,150 per MT. Most private sector mills are currently operating at
65-75 percent capacity. Some are operating at full capacity. This is in
stark contrast to a capacity rate of 40‑60 percent in MY 2004/05. Prices
increased for bread substitutes, such as rice and potatoes, had positive
impact on wheat product consumption, such as pasta.

The Egyptian milling industry has more than adequate capacity to cover
the country's need for 72 percent extraction flour. While total
consumption of 72 percent extracted flour is estimated at 1.8 MMT or 2.5
MMT of wheat, the total milling capacity is currently estimated at 2.7
MMT of 72 percent flour, or 3.76 MMT of wheat. The public sector milling
industry consists of 126 mills (mostly small or medium size) and has a
total capacity of approximately 7 MMT per year. There are seven public
sector companies that operate these mills, and all are affiliated with
one holding company (Food Industries Holding Company). Of the 126 public
sector mills, 109 mills are currently used for the production of 82
percent flour and 7 mills are used to produce 72 percent flour with
total capacity of 6,230 MT per day (1.86 MMT annually). Shares in some
of these companies have been sold to private investors over the past few
years. Although the majority of shares are held by the private sector,
the holding company maintains complete control of these mills. Given
that wheat is a strategic commodity in Egypt, the government is expected
to retain control of most of the milling industry (particularly for the
subsidized baladi bread) for the foreseeable future. There are nearly 36
private held commercial mills, with total capacity of 9,000 MT per day
(2.8 MMT annually). These are permitted to produce 72 percent flour
only. However, some private sector mills are currently trying to obtain
approval to mill 82 percent flour for the government for a fee.

## 

# Trade

Egypt's total wheat imports are expected to remain around 7 MMT during
this marketing year (2005/06). The United States continues to lose
market share in the Egyptian wheat market. From the beginning of MY
2005/06 through the end of February 2006, U.S. exports accounted for 15
percent (820,000 MT) of Egyptian wheat imports and the remainder was
imported from Russia, Argentina, France, and Australia. This compared
with 26 percent (1,417,460 MT) during the same period in 2004/05. The
decline is due to the differential between U.S. wheat prices and prices
from other sources. In a tender, dated January 15, 2006, GASC purchased
60,000 MT of wheat from Russia at a reported price of \$122.50/ MT FOB,
120,000 MT from Australia at a reported price of \$127.50/ MT FOB, and
120,000 MT from France at a reported price of \$125.95/MT FOB for
deliveries through the last half of February 2006. For the same tender,
U.S. soft wheat was offered at \$145/MT FOB. In December 2006, the
private sector purchased 214,000 MT of wheat from Russia at a reported
price of \$139/ MT C&F, and 8,000 MT from Ukraine at a reported price of
\$136/ MT C&F. The current official \$/LE exchange rate is 5.82.

For MY 2006/2007, Egyptian wheat imports are not expected to vary
significantly from the 2005/06 level, with GASC projected to import
nearly 4.6 MMT, and the rest to be imported by the private sector. This
expected increase in private sector imports is due to the increased
number of private sector mills that will be eligible to mill 82 percent
flour for the government against fees. Imports of wheat flour have
become insignificant and are now limited to international donations such
as the 20,000 MT donated by France during this marketing year. Customs
duties for wheat and corn are one percent plus 2 percent for other port
charges.

+--------------------+-------------+--------------------+-------------+
| **Egypt**          |             |                    |             |
|                    |             |                    |             |
| **Wheat**          |             |                    |             |
|                    |             |                    |             |
| **(1,000 MT)**     |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| ####               | MY 2003/04  | ##                 | MY 2004/05  |
| ##### Imports from |             | ##### Imports from |             |
+--------------------+-------------+--------------------+-------------+
| U.S.               | 3,624       | U.S.               | 1,680       |
+--------------------+-------------+--------------------+-------------+
| Others             |             | Others             |             |
+--------------------+-------------+--------------------+-------------+
| Australia          | 2,180       | Russia             | 1,843       |
+--------------------+-------------+--------------------+-------------+
| France             | 336         | Argentina          | 1,262       |
+--------------------+-------------+--------------------+-------------+
| Russia             | 147         | France             | 1,130       |
+--------------------+-------------+--------------------+-------------+
| Germany            | 72          |                    |             |
+--------------------+-------------+--------------------+-------------+
| Sweden             | 58          |                    |             |
+--------------------+-------------+--------------------+-------------+
| Brazil             | 48          |                    |             |
+--------------------+-------------+--------------------+-------------+
| Syria              | 236         |                    |             |
+--------------------+-------------+--------------------+-------------+
| Spain              | 4           |                    |             |
+--------------------+-------------+--------------------+-------------+
| ########           | 3,081       |                    | 4,235       |
| # Total for Others |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Others not       | 168         |                    | 1,010       |
| listed**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Grand Total**    | 6,873       |                    | 6,925       |
+--------------------+-------------+--------------------+-------------+

## Stocks

The Ministry of Supply and Domestic Trade has a policy of maintaining a
five months supply of strategic stocks. However, due to limited storage
capacity that constrains the government\'s target, the strategic stocks
are now redefined to include wheat import purchases in the pipeline,
usually in the range of three months of annual consumption. Currently,
total covered storage capacity for wheat is estimated at one million
metric tons, including about 350,000 MT in silos at three different
ports, 250,000 MT in inland silos and 400,000 MT in open storage mostly
in metropolitan areas. In addition to government storage facilities,
several private sector traders and mills currently have their own
receiving and storage facilities, estimated at 500,000 MT. In order to
increase the storage capacity, the Ministry of Supply is currently
promoting a project to encourage the private sector to build 50 inland
silos with 30,000 MT capacity in different locations throughout the
country. The Ministry of Supply will commit to use 60 percent of the
capacity (90,000 MT) of each silos capacity at the prevailing storage
fee for 5 years.

## 

# Factors Affecting U.S. Trade

Both government and private sector buyers prefer U.S. wheat as they
trust the quality control system in the United States. However, due to
the current market situation namely higher prices, GASC and Egyptian
milling companies are now willing to accept lower quality wheat. Both
sectors are now sourcing more wheat from non-U.S. origins such as Russia
and Ukraine.

U.S. Wheat Associates continues to provide trade servicing and quality
seminars to Egyptian millers, wheat buyers and traders. U.S Wheat
Associates' quality seal program is widely used to promote products
containing U.S. wheat. The USDA GSM‑102 Program is available for both
public and private sector importers of U.S. agricultural commodities,
but importers no longer use the program at present citing the potential
for exchange rate risk in the Egyptian market. In addition, GASC has
recently expressed its concerns about offers received from U.S. wheat
suppliers who offer one shipment (60,000 MT) only per tender at a
competitive price.

+----------------------+-------+-------+-------+-------+------+-------+
| **Egypt**            |       |       |       |       |      |       |
|                      |       |       |       |       |      |       |
| **Corn**             |       |       |       |       |      |       |
|                      |       |       |       |       |      |       |
| **(Thousand          |       |       |       |       |      |       |
| Hectare)**           |       |       |       |       |      |       |
+----------------------+-------+-------+-------+-------+------+-------+
|                      |       | **2   |       | **2   |      | **2   |
|                      |       | 004** |       | 005** |      | 006** |
+----------------------+-------+-------+-------+-------+------+-------+
|                      | Old   | New   | Old   | New   | Old  | New   |
+----------------------+-------+-------+-------+-------+------+-------+
| ###### *             |       | *     |       | *     |      | *     |
| *Market Year Begin** |       | *10/2 |       | *10/2 |      | *10/2 |
|                      |       | 004** |       | 005** |      | 006** |
+----------------------+-------+-------+-------+-------+------+-------+
| Area Harvested       | 680   | 708   | 700   | 710   | 0    | 715   |
+----------------------+-------+-------+-------+-------+------+-------+
| Beginning Stocks     | 178   | 100   | 756   | 500   | 0    | 600   |
+----------------------+-------+-------+-------+-------+------+-------+
| Production           | 5780  | 5840  | 5950  | 5860  | 0    | 5870  |
+----------------------+-------+-------+-------+-------+------+-------+
| TOTAL Mkt. Yr.       | 5398  | 4980  | 5300  | 3700  | 0    | 4000  |
| Imports              |       |       |       |       |      |       |
+----------------------+-------+-------+-------+-------+------+-------+
| Oct-Sep Imports      | 5398  | 4980  | 5300  | 3700  | 0    | 4000  |
+----------------------+-------+-------+-------+-------+------+-------+
| Oct-Sep Import U.S.  | 3738  | 3547  | 3620  | 2775  | 0    | 2400  |
+----------------------+-------+-------+-------+-------+------+-------+
| **TOTAL SUPPLY**     | **11  | **10  | **12  | **10  | *    | **10  |
|                      | 356** | 920** | 006** | 060** | *0** | 470** |
+----------------------+-------+-------+-------+-------+------+-------+
| TOTAL Mkt. Yr.       | 0     | 0     | 0     | 0     | 0    | 0     |
| Exports              |       |       |       |       |      |       |
+----------------------+-------+-------+-------+-------+------+-------+
| Oct-Sep Exports      | 0     | 0     | 0     | 0     | 0    | 0     |
+----------------------+-------+-------+-------+-------+------+-------+
| Feed Dom.            | 9000  | 8245  | 9600  | 5791  | 0    | 5382  |
| Consumption          |       |       |       |       |      |       |
+----------------------+-------+-------+-------+-------+------+-------+
| TOTAL Dom.           | 10600 | 10420 | 11300 | 9460  | 0    | 9870  |
| Consumption          |       |       |       |       |      |       |
+----------------------+-------+-------+-------+-------+------+-------+
| Ending Stocks        | 756   | 500   | 706   | 600   | 0    | 600   |
+----------------------+-------+-------+-------+-------+------+-------+
| **TOTAL              | **11  | **10  | **12  | **10  | *    | **10  |
| DISTRIBUTION**       | 356** | 920** | 006** | 060** | *0** | 470** |
+----------------------+-------+-------+-------+-------+------+-------+

# Production

The total corn area for MY 2005/2006 is estimated at 710,000 HA, of
which 650,000 HA are white corn. The remainder is yellow corn. Area
harvested was slightly higher than the MY 2004/05 level. The small
increase in corn acreage is attributed to increasing demand in corn
silage for livestock feed production. Another slight increase in corn
acreage is expected in MY 2006/2007. This expected growth is mostly
attributed to the increased demand for white corn by the livestock
sector. In MY 2005/2006, total corn production is estimated at about 5.8
MMT. For MY 2006/2007, total production is not expected to rise
significantly from the 2005/06 level.

## Consumption and Utilization

Total Egyptian corn consumption in MY 2005/06 is estimated at 9,460 MMT,
compared to 10.42 MMT in the MY 2004/05. The majority of the local corn
crop is utilized for animal feed (mostly consumed on farm) and about 1.5
MMT is used for food purposes (either milled or consumed fresh). Large
commercial end-users and feed mills rely on imported yellow corn to meet
their requirements.

There has been strong demand for feed corn in MY 2004/05 and the first
quarter of 2005/06. However, this is not expected to continue during the
rest of MY 2005/06. The expected decrease in Egypt's corn consumption is
due to a significant decrease in corn consumption in the poultry
industry as a result of consumer fears of Avian Influenza (AI). Egypt
recently reported its first case of AI. Before this, consumers were
reducing consumption of poultry meat and eggs based on AI occurrences in
neighboring countries. Consumption of poultry meat, eggs and grains has
fallen by 40 percent, 30 percent, and 25 percent, respectively. After
Egypt's confirmation of AI in several locations in Egypt, corn
consumption dropped by 40 percent. In contrast, there has been a
significant quantity of green corn utilized in the production of silage
for both dairy and beef animal feed. There has also been increased
utilization of corn in the production of the 20:80 corn-wheat composite
flour for baladi bread. In MY 2005/06, about 600,000 MT of locally
produced white corn is expected to be delivered to the Ministry of
Supply for the production of subsidized baladi bread. For MY 2006/07,
the total white corn delivery is expected to reach 700,000 MT. There is
a small, but growing demand for food products containing corn (snack
food). This, in addition to the increase in demand for corn oil, has
helped to partially offset the decrease in demand for corn in the
poultry industry.

Egypt imports nearly 400,000 MT of yellow corn annually for the
production of starch and sweeteners. Approximately 2.3 MMT of corn
imported in MY 2004/05 were used for poultry, 1.2 MMT were used for
ruminants and 400,000 MT were used for the starch industry. However,
this trend is expected to change in MY 2006/07 as a direct result of the
crises facing the poultry industry. The poultry sector is exhibiting a
drastic decline in corn usage in MY 2005/06, (about 40 percent) however,
corn use has increased in feed for modern dairy farms and beef and
buffalo fattening operations.

# Trade

Egypt\'s total corn imports for MY 2005/06 are expected to decrease by
approximately 40 percent. The U.S. market share of Egyptian corn imports
in MY 2004/05 was 71 percent (10 percent less than MY 2003/04);
Argentina supplied the majority of the remainder. The large U.S. market
share is mainly due to the availability of high quality American corn at
competitive prices. This trend is expected to continue in MY 2005/06 and
2006/2007. From the beginning of MY 2005/06 (October 2005) through the
end of December 2005, total Egyptian corn imports are estimated at
1,043,590 MT of which 904,742 MT came from the United States; 74,839
from Ukraine; and 64,009 MT from Argentina. This is compared with
1,013,521 MT during the same period in MY 2004. For MY 2006/07, a four
percent decrease in corn imports is expected. Most industry analysts
expect competition from Argentina and other suppliers of yellow corn
will continue to be modest this year; the price gap between U.S. and
other suppliers is expected to be marginal.

+-----------------------+----------------+------------+----------------+
| **Egypt**             |                |            |                |
|                       |                |            |                |
| **(1,000 MT)**        |                |            |                |
|                       |                |            |                |
| **Corn**              |                |            |                |
+-----------------------+----------------+------------+----------------+
|                       | **MY 2003/04** | **Units:** | **MY 2004/05** |
+-----------------------+----------------+------------+----------------+
| **Imports for**       |                |            |                |
+-----------------------+----------------+------------+----------------+
| U.S.                  | 3,148          | U.S.       | 3,547          |
+-----------------------+----------------+------------+----------------+
| Others                |                | Others     |                |
+-----------------------+----------------+------------+----------------+
| Argentina             | 758            | Argentina  | 1,342          |
+-----------------------+----------------+------------+----------------+
|                       |                | Romania    | 32             |
+-----------------------+----------------+------------+----------------+
|                       |                | Ukrania    | 30             |
+-----------------------+----------------+------------+----------------+
|                       |                | Bulgaria   | 25             |
+-----------------------+----------------+------------+----------------+
|                       |                | Malta      | 4              |
+-----------------------+----------------+------------+----------------+
| **Total for Others**  | 758            |            | 1433           |
+-----------------------+----------------+------------+----------------+
| **Others not Listed** |                |            |                |
+-----------------------+----------------+------------+----------------+
| **Grand Total**       | 3906           |            | 4980           |
+-----------------------+----------------+------------+----------------+

## 

+----------------------+-------+-------+------+-------+------+-------+
| **Egypt**            |       |       |      |       |      |       |
|                      |       |       |      |       |      |       |
| **Rice, Milled**     |       |       |      |       |      |       |
|                      |       |       |      |       |      |       |
| **(1,000 MT)**       |       |       |      |       |      |       |
+----------------------+-------+-------+------+-------+------+-------+
|                      |       | **2   |      | **2   |      | **2   |
|                      |       | 004** |      | 005** |      | 006** |
+----------------------+-------+-------+------+-------+------+-------+
|                      | Old   | New   | Old  | ##### | Old  | New   |
|                      |       |       |      | # New |      |       |
+----------------------+-------+-------+------+-------+------+-------+
| ###### *             |       | *     |      | *     |      | *     |
| *Market Year Begin** |       | *01/2 |      | *10/2 |      | *10/2 |
|                      |       | 004** |      | 005** |      | 006** |
+----------------------+-------+-------+------+-------+------+-------+
| Area Harvested       | 640   | 645   | 640  | 645   | 0    | 650   |
+----------------------+-------+-------+------+-------+------+-------+
| Beginning Stocks     | 719   | 459   | 529  | 203   | 0    | 200   |
+----------------------+-------+-------+------+-------+------+-------+
| Milled Production    | 4160  | 4128  | 4200 | 4130  | 0    | 4140  |
+----------------------+-------+-------+------+-------+------+-------+
| Rough Production     | 6400  | 6351  | 6462 | 6354  | 0    | 6369  |
+----------------------+-------+-------+------+-------+------+-------+
| Milling Rate(.9999)  | 6500  | 6500  | 6500 | 6500  | 0    | 6500  |
+----------------------+-------+-------+------+-------+------+-------+
| TOTAL Imports        | 0     | 0     | 0    | 0     | 0    | 0     |
+----------------------+-------+-------+------+-------+------+-------+
| Jan-Dec Imports      | 0     | 0     | 0    | 0     | 0    | 0     |
+----------------------+-------+-------+------+-------+------+-------+
| Jan-Dec Import U.S.  | 0     | 0     | 0    | 0     | 0    | 0     |
+----------------------+-------+-------+------+-------+------+-------+
| **TOTAL SUPPLY**     | **4   | **4   | **47 | **4   | *    | **4   |
|                      | 879** | 584** | 29** | 333** | *0** | 340** |
+----------------------+-------+-------+------+-------+------+-------+
| TOTAL Exports        | 1100  | 1081  | 1000 | 1100  | 0    | 1100  |
+----------------------+-------+-------+------+-------+------+-------+
| Jan-Dec Exports      | 1100  | 770   | 1000 | 800   | 0    | 850   |
+----------------------+-------+-------+------+-------+------+-------+
| TOTAL Dom.           | 3250  | 3300  | 3300 | 3033  | 0    | 3050  |
| Consumption          |       |       |      |       |      |       |
+----------------------+-------+-------+------+-------+------+-------+
| Ending Stocks        | 529   | 203   | 429  | 200   | 0    | 190   |
+----------------------+-------+-------+------+-------+------+-------+
| **TOTAL              | **4   | **4   | **47 | **4   | *    | **4   |
| DISTRIBUTION**       | 879** | 584** | 29** | 333** | *0** | 340** |
+----------------------+-------+-------+------+-------+------+-------+

**Note: Beginning with 2005/2006 data, Egypt's marketing year is defined
as October - September.**

# Production

Rice is the second largest summer crop in Egypt, followed by corn and
preceded by cotton. Production is concentrated in the northern part of
Egypt. Rice requires special irrigation, and the entire crop is
irrigated. It is often planted on reclaimed land where the soil is
fairly saline and has varying degrees of productivity. A limited amount
of rice is also grown in the middle Delta and in Upper Egypt. With
irrigation water provided free of charge and due to the higher
profitability of rice over comparable summer crops (i.e. corn and
cotton) some farmers shifted from cotton to rice. Although, the
government targets only one million feddan (420,000 HA) for rice every
year, in order to ration limited water resources, farmers always exceed
the target, despite the prospect of fines of LE 600/feddan for those who
violate the targets. The government rarely imposes this fine.

The total rice area planted in CY 2005 is estimated at 640,000 HA, or
about 30 percent over the government target, and the same is expected
for CY 2006. Total rough rice production in CY2005 is estimated at 6.35
MMT. For CY 2006, total rough rice production is expected to increase to
6.36 MMT. The average yield in 2005 was 9.8 MT per HA.

The medium grain "Japonica" variety comprises approximately 85 percent
of the rice crop. This variety is preferred by Egyptian consumers to the
higher-yielding long grain Philippini variety. Farmers also prefer to
plant Japonica as it commands a higher price and is more easily milled
in local village mills. The government's policy is aimed at producing
new varieties with higher yields, a shorter period of maturity and more
resistance to insects and diseases in order to save 3 billion cubic
meters of irrigation water annually for its ambitious land reclamation
projects in the Southern Nile valley (Toshka). The Rice Institute of the
Ministry of Agriculture has developed several new rice varieties with
potential average yields of 14 MT/HA, or about 40 percent higher than
the average yield of the traditional varieties. The Ministry of
Agriculture estimates that the new varieties were used in close to 90
percent of the total rice area during CY 2005. The government's
objective is to have the entire rice area planted with this variety by
the end CY 2006.

## Trade

Egypt is a net rice exporter. Small quantities of high quality
name-brand rice are imported by up-scale supermarkets. Rice exports are
estimated at 1,081,301 MT during MY 2004/05, almost all short-grain
varieties. For MY 2005/06, Egyptian rice exports are expected to
increase slightly and reach 1.1 MMT. This increase in exports is mainly
due to the considerable shortage of medium grain rice on the
international market which resulted from less exportable supply in both
the United States and Australia (major short-grain rice producers and
exporters). The current average export price for medium and short grain
is \$385 and \$360/MT/FOB, respectively. This compares to \$358 and
\$335/MT/FOB for medium and short grain, respectively, during the MY
2004/05 season.

+--------------------+-------------+--------------------+-------------+
| **Egypt**          |             |                    |             |
|                    |             |                    |             |
| **Rice Milled**    |             |                    |             |
|                    |             |                    |             |
| **MT**             |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Exports to**     | **2004**    | **Exports to**     | **2004/05** |
+--------------------+-------------+--------------------+-------------+
| U.S.               |             | U.S.               |             |
+--------------------+-------------+--------------------+-------------+
| Others             |             | Others             |             |
+--------------------+-------------+--------------------+-------------+
| Syria              | 188,266     | Syria              | 206,558     |
+--------------------+-------------+--------------------+-------------+
| Romania            | 64,098      | Turkey             | 125,612     |
+--------------------+-------------+--------------------+-------------+
| Turkey             | 59,175      | Libya              | 108,606     |
+--------------------+-------------+--------------------+-------------+
| Jordan             | 44,281      | Romania            | 81,527      |
+--------------------+-------------+--------------------+-------------+
| Sudan              | 43,890      | Ukraine            | 79,699      |
+--------------------+-------------+--------------------+-------------+
| Singapore          | 42,983      | Singapore          | 63,636      |
+--------------------+-------------+--------------------+-------------+
| Lebanon            | 26,984      | Jordan             | 44,676      |
+--------------------+-------------+--------------------+-------------+
| Saudi Arabia       | 19,205      | Sudan              | 38,561      |
+--------------------+-------------+--------------------+-------------+
| Taiwan             | 18,436      | Ivory Coast        | 35,549      |
+--------------------+-------------+--------------------+-------------+
| U.K                | 6,544       | Lebanon            | 28,098      |
+--------------------+-------------+--------------------+-------------+
| **Total for        | 513,862     |                    | 812,522     |
| Others**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Others not       | 256,426     |                    | 268,778     |
| listed**           |             |                    |             |
+--------------------+-------------+--------------------+-------------+
| **Grand Total**    | 770,288     |                    | 1,081,300   |
+--------------------+-------------+--------------------+-------------+

**Stocks**

Stocks for CY 2005 continue to be less than normal, as a result of an
increase in exports for a second consecutive year. Stocks for CY 2006
are expected to continue at the same level given the anticipated same
level in exports and stagnate production. It is estimated that current
stocks stand at 200,000 metric tons.