As Algeria faces
lower domestic production, the world's fifth-largest wheat importer wants to
diversify its wheat supply.
Algeria is the fifth-largest importer and its state buying entity OAIC regularly tenders for wheat, which serves as a useful indicator of global wheat prices. Despite tenders typically being open to optional origins, the country’s imports have been overwhelmingly dependent on two major suppliers: France (milling wheat for bread) and Canada (durum wheat for couscous and pasta). As Algeria faces lower domestic production in MY 2021/22 (July-June), other exporters have been eyeing the market.
France supplies most of the country’s milling wheat used to make bread, accounting for nearly two-thirds of Algeria’s milling wheat imports over the past decade. Other EU suppliers such as Germany, Poland, and Baltic states also supply Algeria, albeit to a lesser extent. The characteristics of French wheat have generally been well suited to the Algerian specifications. This, combined with its proximity that enables prompt delivery and relatively lower freight costs, have historically ensured French dominance in this large market. U.S. and Argentina exports to Algeria have been sporadic and both have been residual suppliers. Over the past decade, Russia and Ukraine have emerged as major producers and exporters but have yet to secure sizeable exports to Algeria, despite their geographic proximity, based in part on the tender specifications and wheat quality characteristics.
But recent developments have threatened to squeeze France’s dominance of the market. In 2020/21, Algeria shifted away from France and toward Germany as the dominant EU supplier. There were some issues with French wheat quality this year, so Germany has continued to seize the majority market share so far in 2021/22.
In June, Russia sent its first shipment in a few years. The Russian Union of Grain Exporters claimed that exports to Algeria in the range of 1 million tons could be feasible this year. Later in August, the test weight criteria were updated, and Ukraine requested further adjustments to the tender specifications that would enable its wheat to qualify. Ukrainian wheat has yet to make significant inroads, lagging behind recent sales of Russian wheat. In November, Russian government officials announced that 250,000 tons had been sold to Algeria for shipment in December.
Meanwhile, Algeria faces a challenging situation with durum, which typically accounts for about 20 percent of its total wheat imports. While France has supplied some durum in the past, the market is dominated by North American exporters. Canada historically accounts for 60 percent of total Algeria durum imports. But this year Canada durum production is only 2.7 million tons, compared to 6.6 million tons last year.
U.S. durum production is only 1.0 million tons, compared to 1.9 million tons last year. With decimated durum crops in both Canada and the United States, supplies are tight and prices high. In the first few months of this year, Algeria has purchased some from Canada but may increasingly turn to Mexico or reduce its durum imports overall. USDA