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Algeria has recently made a bold move by excluding French companies from a wheat import tender and specifically requesting that participating firms do not offer French-origin wheat. This decision is believed to be a result of renewed diplomatic tensions between Algiers and Paris, according to trading sources.
This development, reminiscent of a similar dispute three years ago that led to France being sidelined from Algeria’s wheat tenders for an extended period, could further solidify the dominance of Black Sea supplies in the Algerian wheat market, particularly Russian wheat.
Algeria, known as one of the largest wheat buyers globally, has historically relied heavily on French wheat as its primary supplier. However, recent geopolitical events have prompted a shift in sourcing preferences.
The root of the issue lies in France’s support for a plan regarding the Western Sahara region, which has strained its relationship with Algeria, a supporter of the Polisario Front’s pursuit of independence in the same region.
During a recent tender conducted by Algeria’s state grains agency OAIC, over 500,000 metric tons of wheat were estimated to have been purchased. While French wheat is typically an approved origin under OAIC’s optional-origin basis, in this instance, French firms were excluded from the tender, and non-French companies were instructed not to propose French wheat as a supply option.
The move by OAIC, although not officially explained, is believed to be a reflection of the deteriorating diplomatic ties between the two nations, particularly concerning the Western Sahara issue.
Despite the exclusion of French firms from the tender, the likelihood of French wheat winning business was already low due to a poor harvest and higher prices compared to Russian wheat, which has become Algeria’s main supplier.
Algeria’s previous rift with France three years ago paved the way for increased Russian wheat imports, as the latter is the world’s leading exporter of the cereal. France’s diminished wheat harvest this year, coupled with quality concerns, is expected to significantly reduce its wheat exports.
Analysis: The exclusion of French companies from Algeria’s wheat tender underscores the impact of geopolitical tensions on trade relationships. Investors should monitor diplomatic developments between Algeria and France, as they can influence market dynamics and trading opportunities in the wheat sector. Additionally, the shift towards Black Sea suppliers like Russia highlights the importance of diversifying sourcing channels in the global wheat market.