Egyptian wheat imports to hit record high, despite ergot furore

12.10.2016

The ergot furore, and a "persistent shortage" of foreign currency, will take some toll on Egypt's wheat imports – but not much US officials said, still forecasting that 2016-17 purchases will hit a record high.

The US Department of Agriculture's Cairo bureau cut its forecast for Egypt's wheat imports this season to 11.8m tonnes, flagging the setback from a foreign currency squeeze that has "made opening letters of credit more difficult", and noting hiccups from the zero tolerance on ergot too.

Egypt's wheat imports have been "disrupted continuously since December, when a French shipment was rejected due to Egypt's attempts to enforce a zero tolerance for ergot", the bureau said.

Ergot, a fungal infection of wheat, can cause hallucinations if ingested in sufficient quantities, but is difficult to eradicate completely from shipments, and importers typically allow levels up to 0.05%.

Record high nonetheless

However, the bureau's revised forecast for wheat importers by Egypt the top buyer, was a modest 400,000 tonnes below the USDA's official estimate.

And it still, on bureau estimates, represents a record high, beating the 2015-16 total by 200,000 tonnes.

The bureau noted "high wheat demand" fuelled by population growth of 2.4% a year, besides the expansion in consumers eligible for subsidised bread through a so-called smart card programme.

Switch on, switch off ergot policy

Egypt's imports have been in disarray since December, when the government rejected a French shipment in an attempt to enforce a zero tolerance for ergot.

Since then, Egypt has implemented and revoked the policy three times. This has caused multiple rejections and repeated tender annulments.

Indeed, Gasc purchases so far in 2016-17, which started in July, have slowed to 1.32m tonnes, including at least one rejected shipment.

As of this time in 2015-16, purchases at tender had reached 1.88m tonnes.

Private sector demand

Still, most recent growth in Egyptian wheat imports has been driven by the private sector, whose purchases rose 13.8% to 7.1m tonnes in 2015-16.

"The increase in the private sector's share of imports is driven by favourable market prices, liberalised flour prices under the current bread subsidy system, and 8-9% growth in the baking and pasta sectors requiring different varieties and qualities of wheat," the bureau said.
    

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