The goal of the new policy is to allow a greater number of bidders to participate in government tenders, increasing competition and potentially moderating price increases.
“Notably, global wheat prices have increased over the last year,” the USDA said. “From January 2017 to January 2018 USDA Market News shows U.S. hard red winter wheat increasing 25.4%. Traders remain skeptical that the increased competition will transmit to lower purchase prices.”
Before September 2016, Egypt’s Central Administration for Plan Quarantine (CAPQ) required wheat shipment to be set for Egypt to be pre-cleared by Egyptian inspectors at the port of origin, if it was not pre-cleared there was a possibility the shipment would be rejected in Egypt.
“This practice continued through 2016 when the CAPQ began to reject wheat shipments due to the presence of ergot, implementing a zero tolerance for the fungus,” the USDA said. “Unable to attract bidders to government tenders, the Prime Minister of Egypt issued a decree rescinding the zero-tolerance ergot policy and ending the practice of pre-clearance.”
The decree did not make the imports of wheat into Egypt much smoother. The USDA noted that traders now have issues with increased delays in port clearance and an increase in the shipments facing mandatory sieving to remove foreign material, including ergot.
The USDA estimates Egypt will lose about 1.4 billion pounds on wheat purchases this year due to its import requirements.