Iraq offers opening to French wheat exports
Paris, July 27, 2013
Iraq has agreed to consider importing wheat from France, an Iraqi official and French exporters said, a potential breakthrough for the European Union's top wheat exporter in prized Middle Eastern import markets.
Iraq is one of the world's largest wheat importers, buying about 3 million tonnes a year, mainly for a state food system.
Like other Middle Eastern buyers, it seeks wheat for its local bread with more protein and gluten than in French wheat. But traders say its wish for a wider pool of suppliers in a volatile global market has encouraged it to look at France.
A visit to France last month by an Iraqi delegation including the trade minister produced an agreement to study the sourcing of French wheat by Iraq, according to an Iraqi official who participated in the visit.
The Iraqi delegation accepted in principal a proposal to take one cargo of French wheat as a test, although no timetable was fixed, an official with Iraq's grain board told Reuters, speaking on condition of anonymity.
French exporters familiar with the discussions confirmed that Iraq had expressed its willingness to try French wheat.
The move is welcome for France's grain trade that has been courting Middle Eastern importers in order to extend its export reach and be less reliant on north and west African clients.
Lobby group France Export Cereales, which invited the Iraqi delegation, has argued that French wheat - which falls into the soft wheat category - can be adapted to Iraqi bread by using certain milling techniques and by blending with so-called hard wheat that Iraq usually sources from countries like Australia, Germany and the United States.
The gesture by Iraq marks a second opening this year for French wheat in the Middle East after Saudi Arabia held a first-ever soft wheat import tender, in parallel to its main tenders for hard wheat.
The Saudi state buyer did not specify the exact origin of the 110,000 tonnes of soft wheat it bought in March for June-August shipment, and traders are waiting to see if French wheat is loaded for Saudi Arabia during the shipping period.
Breaking into Iraq could be much harder for French wheat.
While the Saudis have targeted soft wheat to cater for changing eating habits, with growing demand for products like biscuits and cakes that use soft wheat, Iraq's priority remains high-quality wheat for its local bread.
"Iraq is looking to develop a wider range of suppliers," one French trader said. "French wheat is one option but it's going to be tough. The Iraqi requirements are above the average quality of French wheat in protein and gluten."
Iraq's wheat tenders require minimum protein of 12.5 per cent, compared with an 11.4 per cent average in last year's French crop. The country stipulates minimum gluten content of 26 per cent, above a 22.6 per cent average in the last French crop.
"We discussed importing French wheat, but we are still insisting that this low protein wheat is not meeting Iraq's standards," the grain board official said. "I do think that this issue still needs more review."
The gap between current Iraqi requirements and average French wheat quality would mean that the importer would have to lower its current tender terms or hold separate soft wheat tenders like Saudi Arabia, traders said.
Even if negotiations take time and potential French sales to Iraq are modest, this could be a valuable outlet for French wheat, traders argued, as rival exports from the Black Sea region grow in future and as the world's top wheat buyer Egypt tries to streamline its costly imports. - Reuters