Traders reluctant to sell wheat to Egypt after poppy seed saga

25.09.2017

An Egyptian man is holding bread in a vegetables market in Cairo (file). The uncertainty over Egypt wheat cargoes prompted traders to put a premium on Romanian and French supplies, according to two traders.

Traders are a little reluctant to sell wheat to Egypt as the state-run buyer held its first international tender last week since top importer moved to ease a dispute over poppy seeds in cargoes.

The General Authority for Supply Commodities got offers from six companies in September 19’s tender, according to three traders who asked not to be identified because they were not authorised to speak to the media. That’s the lowest number of participants since July, data compiled by Bloomberg show.

The tender was the first since the authorities moved to play down a spat after stopping cargoes of Romanian and French grain from unloading due to the presence of poppy seeds. While Egypt said it will sieve the Romanian and French cargoes, it was still unclear if the grain will receive authorisation to be milled. The saga mirrors a previous standoff with traders over the common ergot fungus, which led to fewer offers and higher prices.

“The market again needs reassurance from the government and clarification over the wheat import specifications and trade rules,” Hesham Soliman, president of Alexandria-based Medstar for Trading, said before the news of the offers last week. “It’s the ergot saga all over again.”

The uncertainty over cargoes prompted traders to put a premium on Romanian and French supplies, according to two traders. One trader estimated that about $10 a metric tonne was added to French supplies, while Romanian prices were raised by about $11 to $12. That echoed traders’ concerns in a Bloomberg survey conducted earlier on September 19. Three traders said they wouldn’t take part in the tender, while three said they would make offers and one was unsure.

Egypt tried to play down the poppy saga, saying the seeds from the red flower that grows in Europe are not toxic and cannot be used to make opium. The drug comes from the pink variety.

Four of the six firms offered Russian wheat, probably because the world’s top exporter hasn’t had any cargoes stopped. The country also needs to offload a record crop, which the US government sees jumping about 12% to 81mn metric tonnes. Some private consultants estimate that the harvest will be even bigger.

All of the offers shortlisted by GASC were for Russian wheat, according to two traders who asked not to be identified. The grain is for October 21-31 shipment.


gulf-times

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