A son of farmer carries freshly harvested wheat in a field in Qaha, El-Kalubia governorate, northeast of Cairo, Egypt May 5, 2016. REUTERS/Amr Abdallah Dalsh
By Maha El Dahan and Eric Knecht
ABU DHABI/CAIRO, Sept 16 (Reuters) - Egypt was expected to cancel its second consecutive international wheat tender on Friday after it failed to receive any offers from suppliers due to its strict ergot fungus ban which could cut off its access to grain supplies from abroad.
Egypt, the world's largest wheat importer, cancelled its last wheat tender on Aug. 31 after receiving only one sale offer. That was the state grain buyer GASC's first tender since formally reinstating a zero-content policy on ergot.
Ergot can cause hallucinations when consumed in large amounts but is considered harmless in low quantities. The standard international policy is to allow 0.05 percent ergot content in wheat imports, which GASC did before last month's reversal.
Cairo-based trade sources said on Friday GASC was holding a meeting with suppliers and expected a formal tender cancellation to be announced shortly.
"The risk of offering in GASC's tenders is simply too high at the present time. It is foolish to offer something you know you cannot deliver and zero ergot is not possible," one European trader said, echoing the sentiment of several others.
Quarrels have persisted between the state's agricultural quarantine office, which has maintained a zero tolerance policy since late last year, and ministries that support the international norm, sowing confusion among suppliers and frustrating GASC's attempts to make purchases.
On Aug. 28 Egypt reinstated the ban on imports of wheat with even the smallest amount of ergot content. This confused global suppliers who thought the matter had been settled by an agriculture ministry decree passed in July adopting the common international standard.
Some traders saw GASC's attempt to seek tenders on Friday, just days after cargoes had been rejected and held up from shipment abroad, as designed to fail.
"I suspect GASC wants to show the other Egyptian government departments that international tenders with zero ergot level are impossible, which I think they are," another European said.
GASC buys wheat for the country's massive food subsidy programme to produce the saucer-sized flat loaves of bread for millions of Egyptians.
Wheat is a strategic commodity that has triggered mass riots during even marginal price rises.
"The Egyptian government will soon be facing the time when it has to find a solution to the ergot problem if its people want to eat," the European trader said. (additional reporting by Michael Hogan in Hamburg; editing by Jane Merriman, Greg Mahlich)