January 26, 2016


Wheat shipments delayed from entering Egypt



Four wheat shipments had been withheld from unloading on Egyptian shores, with the latest - a 63,000 tonne French cargo - stranded for more than a month after it was rejected by local authorities for carrying traces of the poisonous ergot fungus, the Wall Street Journal reported.


The shipment was acquired for about US$12 million from Bunge in October last year, and reached the port of Damietta on December 21. Its rejection came as a dispute - between various branches of the Egyptian government - occurred over the permissible amount of ergot in shipments.


Other affected shipments included those sold by Glencore PLC and French farm groups, Soufflet and InVivo. The cargoes were held from departing the French port of Dunkirk as sellers had yet to receive letters of credit from Egyptian banks, confirming that the country's state grain buyer, General Authority for Supply Commodities (Gasc), could pay.


Small traces of ergot are usually allowed as it is a significant challenge to verify that a shipment is not tainted with the fungus.


In contrary to a stringent policy introduced by one element of the agriculture ministry, the General Authority for Supply Commodities (Gasc), the country's state grain buyer, permits wheat with 0.05% ergot. This standard is not likely to change, according to officials from Gasc and Egypt's Ministry of Supply.


However, the agriculture ministry is poised to block affected shipments regardless the amount of ergot. "Egypt is ergot-free, and accepting this shipment meant contaminating our crops and reserves," a ministry spokesman said.


This controversy has apparently kept some trading companies from taking part in Egypt's latest grain tender. The number of wheat suppliers is seven, a drop from the average of 17 in the past 10 tenders.


Currently, grain is in a bull market which, as a result, led to Gasc's purchase of 235,000 tonnes of wheat at just over US$189 per tonne, its cheapest purchase in four months.


According to the most recent records, Egypt's annual purchases are worth about US$2.1 billion.

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