Russia may ban Egyptian citrus amid wheat dispute

Russia threatened to ban Egyptian citrus imports on Tuesday, a move that could escalate a trade dispute over exports of Russian wheat to the world's largest importer of the grain.

Moscow said this week it hopes to hold talks with Egypt, its top buyer, over Cairo's failure to approve Russian wheat shipments since tightening its regulations on ergot, a common grains fungus, in late August.

Several cargoes suspected of containing trace levels of the fungus have since been held at Russian ports, awaiting a decision from Cairo over whether to allow them to pass under the old rule, traders said.

Zero tolerance on ergot could halt Russian wheat exports to Egypt at a time when the country has its largest wheat crop in post-Soviet history.

Egypt's state grain buyer GASC purchased 540,000 tonnes of the grain from Russia since July before tightening its import restrictions on ergot, banning the fungus entirely and saying the new rule would apply retroactively, affecting hundreds of thousands of tonnes yet to be shipped.

The sales were originally agreed to under a rule allowing 0.05 percent ergot, a common international standard.

Russian wheat export prices fell last week, partly due to delayed supplies to Egypt, and are expected to remain under pressure until the situation is resolved, traders said.

Egypt bought 6 million tonnes of Russian wheat in the 2015-16 marketing year, which ended on June 30, a quarter of Moscow's total wheat exports for the period.

Russia's food safety watchdog Rosselkhoznadzor said on Tuesday it was concerned about the "systematic breach of international and phytosanitary requirements" in "massive supplies" of Egyptian citrus fruit set for export to Russia

Russia has a history of using threats and limiting imports in trade disputes. .

It did not disclose the list of the products that could be banned and did not answer calls from Reuters.

Russia bought around $150 million of Egyptian citrus products in 2015, about 13 percent of its total citrus imports from across the world.

One Egyptian fruit trader told Reuters he had not heard of any Russian complaints about Egyptian citrus.

"Of course there are huge worries for us because any comment or decision will directly affect the size of contracts," he said.

The head of Egypt's agriculture quarantine said it had received no notification from Russia about the "systemic breaches" of its fruit.

"The Egyptian agriculture quarantine will respond to this forcefully and based on scientific grounds," quarantine head Ibrahim Imbaby told Reuters.

"gypt is the largest customer for Russia. Everything is quite gloomy with its absence on the market," Dmitry Rylko, the head of IKAR consultancy said.

A source at Russia's Black Sea port of Novorossiisk said he did not expect the delayed wheat shipments to see any progress until the end of Egypt's Eid al-Adha holiday later this week.

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