By Gus Trompiz and Michael Hogan
PARIS (Reuters) -Algeria excluded French companies from a wheat import tender this week and required that participating firms did not offer French-origin wheat, in apparent fallout from renewed diplomatic tensions between Algiers and Paris, trading sources said.
Algerian state grains agency OAIC said in a statement on Thursday that it held a restricted tender on technical grounds linked to industrial needs, adding that it treats all suppliers fairly regardless of their wheat's origin.
Algeria is one of the world's biggest wheat buyers. For many years France was by far its largest supplier but it has been overtaken by Russia in the past two years as Black Sea supplies have flowed into Algeria's massive import market.
The restrictions on France reported by sources echo a diplomatic dispute three years ago that led to France being sidelined from its former colony's wheat tenders for months.
France's decision in July this year to back a plan for the Western Sahara region under Moroccan sovereignty angered Algiers, which supports the Polisario Front's quest for an independent state there.
Algeria held one of its regular tenders on Tuesday, in which OAIC is estimated by traders to have purchased over 500,000 metric tons.
OAIC's tenders are held on an optional-origin basis, under which the seller can choose the source of the grain within a range of approved origins including French wheat.
But six sources familiar with the matter said that this time French firms did not receive an invitation to participate, while non-French companies that took part were asked not to propose French wheat as a supply option.
OAIC did not explain to firms the reasons for its move, according to the sources, who said it was understood to reflect the souring of diplomatic relations, including over Western Sahara.
France's foreign trade ministry declined to comment, referring the matter to the agriculture ministry, which did not immediately respond to requests for comment.
French wheat had not been seen as in contention to win business in this week's tender due to a poor harvest and much higher prices than in Russia.
But OAIC's move prevented French firms from potentially supplying other origins while raising uncertainty over how long such an exclusion might last.
OAIC added in its statement that suppliers meeting technical and commercial requirements will be invited to participate in future tenders.
Algeria's previous rift with France three years ago supported the opening of its wheat market to Russia, the world's biggest exporter of the cereal.
Repeated heavy rain led to the smallest French wheat harvest since the 1980s this year. The plunge in volume, coupled with mixed milling quality, is set to slash exports from the European Union's biggest wheat-producing country.