European wheat futures declined to fresh contract lows on February 3 after Egypt decides to permit wheat imports with up to 0.05% of grain fungus ergot, Reuters reported.
The country previously enforced an unpopular policy that would only allow imports with 0% ergot. Despite the reversal, traders are still wary of future developments while a spike in the euro is imposing difficulties for exports.
There are also critical issues involving payment delays, said one trader. Hence, suppliers are not confident of Egypt's capability in honoring its contracts.
"…people will be awaiting formal confirmation of a tolerance level for ergot before reacting as there have been so much uncertainty about the policy (among) the different ministries in past weeks," another trader added.
Euronext March wheat dropped to EUR158.50 (US$175.70) per tonne, before rising to EUR159.25 (US$176.55), thus breaching the psychological support level of EUR160 (US$177.38).
In the meantime, low prices are also hurting the sales of French wheat to Algeria.
Although it remains unclear the amount that Algeria bought, traders believed the country paid about US$178 – US$179 per tonne, including cost and freight.