Egypt rejected a French wheat shipment it said did not meet strict new import rules, rattling traders who said the move could drive up the cost of supplying the world's largest buyer and endanger its ability to provide its poorest citizens bread.
The 63,000-tonne shipment arrived to Egypt in December and was initially rejected by agricultural quarantine for containing ergot, a common grains fungus.
The shipment was re-inspected, and the results have been eagerly awaited by traders who say they are a crucial test, signalling whether Egypt would stick to new import requirements calling for zero-tolerance toward ergot.
Traders say a zero standard is difficult to guarantee and adds a layer of risk that will drive up the cost of supplying.
When asked whether Egypt would now have to re-export the idle French wheat sitting at its port, GASC Vice Chairman Mamdouh Abdel Fattah said only: "GASC now has nothing to do with it".
The ministry of supplies and GASC have baffled wheat suppliers in recent weeks by continuing to assure them their wheat can contain up to a 0.05 percent level of ergot, a common international standard, even as the agriculture ministry has said it would categorically reject all such shipments.
The conflicting policy has created confusion among traders, who turned out in lower numbers than usual at GASC's latest wheat tender this month.
"It is uncertain now what GASC is looking for in its wheat," one Cairo-based trader said.
Egypt imports around 10 million tonnes of the grain each year, the lion's share of which goes to providing cheap, subsidised bread to feed its population of 90 million.
Suppliers will likely demand higher prices following Sunday's decision in order to compensate for the added risk of having massive vessels turned away at the port, another Cairo-based trader said.
Egypt says it has enough strategic wheat supplies to last until May 11, but traders say these supply figures are inflated, and include hundreds of thousands of tonnes purchased by GASC but still outside the country, raising the possibility that they too will be rejected before reaching the country's stocks.
Suppliers have remained patient — despite both the new ergot restrictions and a dollar crisis that has delayed opening letters of credit — simply by way of the country's exceptional size, one trader said.
"GASC is still one of the biggest buyers. You cannot leave this market."
