(DTN) The political crisis in Egypt rocked markets last week, driving commodity prices lower as speculative money fled into dollar investments. But does Egypt even matter in agricultural trade? The answer is "yes," although its status as a U.S. trade partner is slipping in the face of growing trade with other countries such as China.

"Egypt is one of the largest buyers of wheat in the world," said DTN Senior Analyst Darin Newsom. "Markets tend to not like upheaval, possibly accounting for some of the pressure seen last week. It looks to me like wheat came under pressure from this uncertainty, after trading up to almost $10 ($9.60 in the new-crop July Kansas City) with the end of the month looming. It is too early to tell, though, what the end result might be."

In fiscal year 2008, Egypt was the eighth-largest market for U.S. ag products, with purchases of $2.2 billion worth. In FY 2009, it was No. 10, with $1.4 billion in purchases, and in FY 2010, it was No. 12, with $1.6 billion.

It is the No. 4 market for U.S. corn, buying 3.3 million metric tons during January-November 2010 (according to the most up-to-date data) and 2.3 mmt during the same time a year earlier.

Egypt ranks No. 6 in wheat purchases from the U.S.: 1.2 mmt in January-November 2010 and 681,728 in the same months in 2009.

It is also No. 7 in soybean purchases with 915,921 metric tons bought in that time period 2010 and 108,897 in the same period 2009.

USDA pegs North Africa's (Algeria, Egypt, Libya, Morocco, Tunisia) total wheat imports at 22.3 mmt in the 2010/11 marketing year; 21.4 mmt in 2009/10; and 23.5 in 2008/09.

Also important to U.S. producers is the fact that Egypt is a leader and strong supporter in the development and acceptance of agricultural biotechnology. In 2008, for example, it approved its first genetically engineered crop, Bt corn, for domestic planting.

Shake Out

Although commerce is reported to be moving as usual through the Suez Canal, the market is concerned in the short term about shipping disruptions and possibly added costs.

Certainly, the pressure is to continue or increase food and feed imports. Today's leaders are well aware of the premise often stated by Nobel Laureate Norman Borlaug: "You can't build a peaceful world on empty stomachs and human misery." The rising cost of food must be addressed.

Brett Cooper, senior manager, markets at FCStone Australia, was quoted by Reuters today in agreement: "Longer term, when governments are under pressure in emerging markets they will make sure that people's stomachs aren't empty."

Australia hopes to capture additional wheat sales. Egypt has a history of buying lower-quality wheat, and as much as half of Australia's crop this year fits that category due to the excessive rains it received.

USDA's Foreign Agriculture Service provided the following data on Egypt:

Population: 81,713,517 (July 2008 est.)

GDP per capita: $5,000

Agriculture: 13.8 percent of GDP

Agriculture Production: cotton, rice, corn, wheat, beans, fruits, vegetables; cattle, water buffalo, sheep, goats

Major Agricultural Exports: crude oil and petroleum products, cotton, textiles, metal products, chemicals

Major Agricultural Imports from U.S.: machinery and equipment, foodstuffs, chemicals, wood products, fuels

http://www.dtnprogressivefarmer.com