Egypt to Launch Agricultural Commodities Bourse by Year’s End

CAIRO – Egypt plans to launch an agricultural-focused commodities trading exchange, the first of its kind in the Middle East, by the end of 2016, Supplies Minister Khaled Hanafi said on Monday.

Speaking at a press conference announcing the completion of a feasibility study on the new bourse, Hanafi said its launch would protect small farmers from volatile price swings and help to connect their output to supply chains.
“Egypt is the biggest importer of grains, and it will benefit from this, turning this from a point of weakness into a strength as Egypt becomes a point of exchange for the whole region,” said Hanafi.

Egypt announced plans to set up a global commodities centre in 2014, but gave few details at the time.
The next step is to draw up regulations and establish the electronic infrastructure that will connect traders with farmers, Hanafi added.

“We’re going to set up the first commodities exchange in Egypt and the Middle East,” said Iman al Mutlaq, chief executive of Sigma Investments, the company that conducted the feasibility study and which is leading a consortium setting up the exchange.

“We aren’t going to simply copy and paste other exchanges. This is going to be an Egyptian exchange. There will be price discovery, and we will put prices in Egyptian pounds,” said Mutlaq.

The commodities exchange was previously floated in 2014 as part of an ambitious project to transform Egypt into a regional trade hub — processing and re-exporting up to 65 million tonnes of wheat, soybeans, sugar and other commodities — but the plan was criticised by industry as vague and under-studied.

The latest plan envisions a bourse that will begin with eight commodities — six agricultural commodities, oil and gold — and this small number will help promote high initial volumes, Mutlaq said.

The exchange will feature spot, derivatives and futures trading, and aims to trade about 2 million contracts in its first year, and around 9.5 million within five years, Sigma said in a presentation announcing the completion of the study.

As part of the exchange’s launch, a mobile application will be offered to Egyptian farmers that will allow them to have their agricultural output tracked by the market, electronically linking their crops to the exchange, Mutlaq said.