Traders shun Egyptian wheat tender

01.09.2016

Egypt cancelled its first international wheat tender in the wake of its decision to reinstate a zero-tolerance policy on ergot contamination in wheat imports.

Only one cargo of wheat was offered, as traders stayed away out of fear that cargoes might be rejected, due to trace contamination by the fungus.

Egypt is the world's top wheat importer, and the news that it would be returning to the stringent ergot policy weighed on prices when it broke on Sunday, as the market believes that no supplier can guarantee completely ergot-free wheat.

"It would appear that until Egypt revises their ergot policy, they won't be receiving offers from most trading companies and for good reason," said Tregg Cronin, at Halo Commodities.

Sole offer

Venus offered Ukrainian wheat at $179.32 a tonne, slightly cheaper than the $179.94 asked for Ukrainian wheat by Louis Dreyfus in the previous tender, held on Friday.

This was up from the $171.10 that Venus asked for Ukrainian wheat the last time it participated in a Gasc tender, earlier last week.

Another offer was withdrawn during the tender.

Foreign reserve shortage

Confusion over Egyptian policy over ergot caused massive disruption to the country's wheat imports earlier this year, but the ban was lifted in July, allowing for shipments within the internationally accepted tolerance level of 0.05%.

Mr Cronin suggested that concerns about a shortage of foreign currency could be in play.

He noted that "the spiralling forex reserves of Egypt is undoubtedly playing a role in their procurement system, which could leave the Egyptian people the loser in this mess".


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