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Algeria faces record wheat imports. But where from?

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Algeria's wheat import needs may hit a record high, at a time of poor quality supplies from its default origin, France, raising questions over where the country will source its needs.

The North African country will import 7.5m tonnes of wheat in 2014-15, cementing its place as the world's second ranked buyer of the grain after Egypt, the US Department of Agriculture bureau in Algiers said.

The figure is 1.5m tonnes above the USDA's official forecast for Algeria's purchases, and ahead too of the record set in 2013-14, reflecting a drought-hit harvest, which the bureau pegged at a six-year low of 1.8m tonnes.

"The decrease in production is mainly due to the drought-affected provinces in eastern Algeria," the main production region which suffered a rain shortfall for a second successive growing season.

"Algeria will likely rely again on imports to fill the gap" between output and demand pegged at nearly 10m tonnes, with some draw down on inventories too.

"Price relief this year will also probably boost imports," the bureau said, a reference to the drop in world prices this year.

Choosy buyer

However, the upgraded import estimate comes at a time of elevated concerns over the level of export supplies of quality wheat from France, Algeria's default source of grain for imports, after a rain-hit harvest.

Rainfall on ripe crops encourages sprouting, lowering milling quality.

And Algeria a famously picky buyer, enforcing high specifications.

Last week, officials at Algeria's state grain authority reminding traders of a demand for single-origin supplies, amid evidence of French merchants buying in foreign grain from the likes of Germany, Lithuanian and Poland to mix with domestic wheat and beef up its quality.

Alternative origins

Indeed, Algeria, unlike many other North African and Middle Eastern countries, has not historically bought from Russia and Ukraine, over concerns of insect damage to grains, with Canada, Germany and the US among major

"They are more likely to go for wheat from Poland or the Baltic states," traders at a major European commodities house said.

However, in choosing these origins, Algerian buyers "will have to compete with other 'discerning' importers such as Iran and Saudi Arabia".

The UK, typically a source of lower quality wheat, which is a safer bet in its wetter climate, is also being raised as a potential replacement origin to France, after a harvest this year which, helped by a dry start to harvest, has proven of good quality.

But "although this year's UK crop can satisfy the specification for Algeria, the Algerians, like many importers, don't really like UK wheat.

"In their eyes, UK wheat is feed wheat and it is difficult to convince them otherwise."


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