UPDATE 2-Egypt wheat stocks dwindle, sufficient for 89 days

Wed Mar 13, 2013 9:23am EDT

* Stocks at 2.207 million tonnes

* Enough to last 89 days

* Wheat imports down sharply this year (Adds trader, local harvest, details)

By Yasmine Saleh

CAIRO, March 13 (Reuters) - Egypt's strategic stocks of wheat have fallen to 2.207 million tonnes, enough to last 89 days, a cabinet report said on Wednesday, as the top global importer struggles to ensure supply through an economic and political crisis.

Economic turmoil in the North African country has made it harder it to arrange payments for wheat imports, with the pace of purchases having tumbled since the start of the year.

While stocks have fallen, the government also upped its projection of the local harvest to more than 9 million tonnes - a number that would exceed the current record of 8.523 million tonnes in 2009/10, according to U.S. Department of Agriculture (USDA) estimates.

The Egyptian cabinet's forecast for its upcoming harvest is also above the USDA's crop estimate of 8.5 million tonnes, released last week.

International traders say that even with a brightened harvest outlook, the country will need to buy further significant amounts to maintain minimum stock levels prior to its harvest being ready for consumption.

"The total strategic stocks of local and imported wheat have reached 2.207 million tonnes, enough for 89 days until June 9, 2013," the cabinet said.

It added that this amount would rise when shipments from deals already agreed arrive. When these amounts arrive it will add an extra 479,000 tonnes.

The current stock levels compare with 2.292 million tonnes, or 95 days cover, reported on February 27.

Egypt's state grain buyer General Authority for Supply Commodities (GASC) bought around 235,000 tonnes of wheat on the international market between Jan. 1 and Feb. 20, roughly a third of what it purchased in the same period a year ago.

STRATEGIC BUYS

Egypt normally buys strategically to ensure that it has wheat stocks equal to at least six months' consumption in its silos. It relies heavily on imports to feed its 84 million people; half of the wheat they consume is imported.

"This is lower than they historically have carried in the past," a European trader said, commenting on the new figures. Shipments expected from the United States in the coming weeks will help maintain the current levels, the trader added.

"However, I think Egypt's private buyers or GASC need to buy an additional 800,000 to 1 million tonnes of wheat for shipment before the end of May when their local crop becomes readily available, to keep an adequate level of stocks."

The weak Egyptian pound has pushed up the cost of wheat imports paid for in dollars. The pound has fallen more than 8 percent since the end of last year as concerns deepen about the state of the country, hit by political infighting and localised unrest.

Food supply is a politically-sensitive issue in Egypt, where rising food prices are being passed on to struggling consumers and shortages have provoked unrest in the past. (Additional reporting by Sarah McFarlane in London; writing by Sylvia Westall; editing by Veronica Brown and Keiron Henderson)