Massive demonstrations in Egypt and throughout this second round of protesting has the U.S. Grains Council stressing the importance of staff security. As the military’s ultimatum deadline came and went, Egyptian President Mohamed Morsi urged the military not to take sides and offered a consensus government as a solution to the upheaval.
As part of its commitment to the U.S. grain industry of having boots on the ground representation, the Council has several staff members based in Cairo. “First and foremost, the safety of our staff is paramount. The U.S. Embassy has closed offices for much of the week and the Council has done the same,” said Cary Sifferath, USGC regional director in Tunisia. “We’ve notified staff to stay inside and work from home—but above all, be safe.” With the observed Independence Day holiday, Council staff is not expected to return to the office until next week at the earliest.
Commenting on how this could affect grain imports, Sifferath said, “The economy and the purchasing power of the average Egyptian has been severely hurt since the last uprising. With it happening all over again, it should only exacerbate problems.” He went onto mention the impacts a weaker economy would have on grain imports. By having less purchasing power, the Egyptians would be less likely to eat as much meat and/or go out as much. “The Council was already expecting a decline in corn imports into Egypt, but this could bring them even lower.”
Another critical development to monitor is the Suez Canal. “There’s much more at stake than perhaps a few thousand tons of corn and wheat. The real issue at hand is the Suez Canal,” said Kevin Roepke, USGC manager of global trade. CNBC reports that 8 percent of all seaborne trade transverses the Suez Canal and global equity markets had a general selloff as a result. Oil prices reacted sharply to the threat of a canal closure by injecting risk premium into the market. West Texas Intermediate crude is now trading at yearly highs of more than $102 a barrel, while Brent crude is more than $105 a barrel. The Suez canal is essential for trade and the Egyptian economy. The situation bears close watching.
The Council will continue to monitor the situation from a feed grains perspective to see what impacts can be expected as this situation continues to develop rapidly.