MOSCOW: Russian wheat exports are at risk three weeks before the start of the new 2017/18 marketing season due to a dispute over a common fungus in Egypt, its largest market, analysts said. An Egyptian court has decided to reinstate a zero tolerance policy on the common grain fungus ergot, lawyers on the case told Reuters on Tuesday, plunging trade with the world’s largest wheat importer back into uncertainty.
As one of the biggest exporters of wheat to Egypt, Russia is likely to feel the impact of any restrictions more severely than others. Like other exporters, Russia had several cargos of wheat rejected when the zero tolerance policy was last in place. “Egypt’s zero tolerance on ergot, if approved, would have a negative effect on Russian wheat supplies because we are number one on this market,” Dmitry Rylko, the head of IKAR agriculture consultancy, said on the sidelines of a grain conference. Egypt last year scrapped a ban on ergot in grain imports after it effectively halted purchase tenders because trading houses refused to participate, saying the ban was an impossible requirement.
The renewed discussion on the issue in Egypt comes as Russia, one of the world’s largest wheat exporters, enters the new crop season with all-time high stocks of grain after a record crop in 2016. Prospects for this year’s crop are also bright so far. SovEcon, another Moscow-based agriculture consultancy, said in a note that the previously agreed supplies of 180,000 tonnes of Russian wheat to Egypt’s state buyer GASC were at risk in June-July. “One may expect full suspension of (Russian) supplies to Egypt in case the rule is kept in June-July which would negatively affect the pace of Russian exports and export prices,” SovEcon added. Russia exported 23.4 million tonnes of wheat in July-April, of which 5.9 million tonnes were supplied to Egypt. The issue with Egypt comes shortly after Russia has restored agriculture supplies to Turkey after Ankara’s short-lived limits on Russian imports as President Vladimir Putin lifted restrictions on hiring Turkish workers in Russia.
