CAIRO: Egypt on Wednesday announced the formation of a commodities exchange which will initially trade wheat, oils, sugar and rice beginning in the first half of 2021.

Egypt, the world's largest wheat importer, established the exchange to provide protection for small farmers and producers and make their stocks available to the wider market, the supply ministry said.

The exchange will have 91 million Egyptian pounds ($5.78 million) in capital and will be chaired by Ibrahim Ashmawy, the current head of the internal trade development authority which falls under the supply ministry.

Farmers, traders and producers can deposit their stocks in any of the supply ministry's certified storage facilities where they will be evaluated and graded, then directly traded on the electronic platform, Ashmawy said. Supply and demand will then determine the price of these commodities for the consumer, he added.

"It is strange that they did not choose to start with crops that are widely grown in Egypt privately by farmers such as citrus," a Middle East commodities expert, who declined to be named, said.

Citrus is one of Egypt's most competitive agricultural exports, whereas it imports sugar and vegetable oils, in addition to wheat, for its sprawling food subsidy programme which covers the needs of more than 60 million people.