Egypt Lifts Import Ban on Fungus-Tainted Grains


Government backs down after face-off with international grain trade threatens wheat supply of country

Egypt has repealed its ban on imports of grains tainted with ergot, a fungus found in wheat, backing down after a face-off with the international grain trade that was threatening the food security of the import-dependent country.

The ban had led to the rejection of hundreds of thousands of tons of grain found to contain ergot. The change of course comes after Egypt, the world’s largest importer of wheat, canceled three tenders to buy wheat in three weeks, as its suppliers declined to make offers in protest against the ban.

“The current situation could negatively impact the country’s strategic wheat reserves and the ability to meet the local market’s needs in the medium term,” the Egyptian government said on Wednesday.

The government said Egypt would abandon its zero-tolerance approach and fall into line with United Nations-backed international standards that tolerate grain containing up to 0.05% ergot. The blight is dangerous in large doses but widely tolerated in trace amounts. Traders said that it is nearly impossible to guarantee a shipment is entirely ergot-free.

The zero-tolerance policy resulted in 540,000 tons of wheat imports being suspended, according to the government.

Shipments that had been rejected are now expected to be approved for import, a spokesman for Egypt’s supply ministry said.

“They needed to come to a conclusion sooner rather than later,” said Graydon Chong, senior commodities analyst at Rabobank. “Egypt has four to five months of wheat stocks. The last thing they would want is to run stocks down too low and see domestic prices increasing dramatically.”

Egypt imported 12.1 million tons of wheat in the year through June, according to U.S. Department of Agriculture data.

As well as shoring up Egypt’s food supplies, the resumption of imports would be a relief for a global market burdened with a substantial oversupply. This year’s world grain harvest will be the biggest on record, the International Grains Council said last month. Global grain stockpiles will total 492 million tons at year-end, up from last year’s record of 469 million tons, according to the council.

Prices for Chicago-traded wheat futures got a modest boost on Wednesday after the news about Egypt’s policy reversal, edging up from $4.03 a bushel to $4.08 a bushel, little changed from Tuesday after having been lower earlier in the day. Prices are down 13% in 2016.

“We’ve seen the market reverse its early losses but for wheat it’s certainly going to need continued positive news to see prices move higher,” said Mr. Chong at Rabobank.

Readers choice: TOP-5 articles of the month by UkrAgroConsult