The world grain trade, including Australia, is hoping to resume wheat sales to Egypt soon, after the world’s largest wheat importer announced overnight it will lift its controversial zero-tolerance policy to the presence of ergot in wheat.
The policy, introduced last month, effectively saw exports to the world’s biggest wheat market grind to a halt.
Egypt has issued three successive tenders for wheat since issuing the policy and all were boycotted by suppliers, who said the condition was impossible to guarantee. “No country anywhere in the world can provide wheat with zero ergot in bulk volumes,” one European trader quoted by Reuters said.
Egypt’s Government announced on Wednesday night (Australian time) it is returning to its previous 0.05 percent tolerance level for ergot.
The decision to apply last month’s zero-tolerance policy “retro-actively” to outstanding contracts had led to the suspension of 540,000 tonnes of wheat en route to Egypt after being suspected of ergot contamination, the Egyptian government said.
Reuters said a flurry of cargoes were held up and rejected at Egyptian ports after last month’s ban.
That infuriated traders, who argued their contracts, made under the old 0.05 percent rule, should be honoured.
The biggest suppliers of wheat to Egypt are Black Sea producers, led by Russia.
The Russian Government reportedly banned Egyptian fruit and vegetable imports shortly after one of its cargoes was rejected before setting sail from Novorossiysk.
After announcing its policy reversal, the Egyptian Government said it had enough wheat to sustain the country for four months.
The Egyptian Government said it will contract an international firm to conduct ergot inspections on wheat shipments.
This would replace its previous practice of sending foreign delegations led by officials from three of its ministries.
The absence of the world’s largest buyer of wheat comes at a time when the world is awash with excess grain. The US Department of Agriculture has recently increased its world production estimates for 2016-17 to a record high of 744 million tonnes, due to increases in India, Kazakhstan, Brazil and Australia.
Of the 11-12 million tonnes of wheat Egypt imports each year, around 300-500,000 mt is Australian origin