Posted on March, 9, 2023 at 08:17 am
Morocco, a major cereal importer, has modified its wheat import subsidy scheme to make it easier for companies to bring in cargoes from the Black Sea region, an official at state grain agency ONICL said on Wednesday.
The revision, also reported by traders, means that as of March importers are able to receive a monthly subsidy if cargoes are loaded by the end of the month, unlike previously when ships had to arrive in Morocco by the month's end.
Encouraging shipments from the Black Sea region, which includes Russia and Ukraine, was "one of the reasons" for adjusting the import subsidy terms, the official told Reuters.
The change could increase competition in a Moroccan import market dominated by wheat from France and other relatively nearby suppliers in the European Union.
Morocco has stepped up imports after a drought-hit harvest last year, and has overtaken Algeria as the top export destination for EU wheat in the 2022/23 season.
Like other wheat importers, it faced record prices last year after Russia's invasion of Ukraine upended global grain trade, and the country is also experiencing wider food inflation because of its drought and other issues like fertiliser costs.
French traders said the change should not have a big immediate impact as ONICL had separately maintained a lower subsidy rate for Russian and Ukrainian wheat compared with imports of other origins like EU supplies.
But it could lead merchants to source more cargoes from EU countries on the Black Sea, like Romania, and make shipments from Ukraine and Russia more feasible in future, particularly if war disruption there eases, they said.
"There's a mixed feeling with the news about the date of loading," a French trader said. "But the EU still remains in pole position on the Moroccan market."
Traders have reported large sales of French and northern European wheat in the past week for March shipment to Morocco.
Attention is turning to Morocco's 2023 grain harvest to see if earlier drought will affect yields again and maintain high import requirements next season.
French traders said grain firms had been informed the import subsidies will be offered till the end of May, suggesting Morocco will then close its import window to focus on its local crop.
However, Morocco usually does not confirm the end of its import campaign until harvest prospects become clearer around April.
Source: Nasdaq