* Russian wheat seen regaining pole position in Egypt
* Main buyer GASC likely to toughen checks on wheat imports
By Sybille de La Hamaide
PARIS, June 16 (Reuters) - Suspicions that a cargo of Russian wheat may have carried false quality documents are unlikely to cost Russia its valued place as top exporter to major grain consumer Egypt, analysts say.
Hesitant grain sellers and cautious buyers could shun Russian wheat for a few months but, if it appeared the alleged fraud was not more widespread, Russia's cheap wheat would flood the Egyptian market again, they said.
"Obviously everybody will be more on their guard regarding quality and certificates but Egypt needs Russia as much as Russia needs Egypt," said Geneva-based Agrinews analyst James Dunsterville.
Egypt is currently the biggest consumer of Russian wheat with more than four million tonnes estimated this season.
That accounts for approximately a quarter of Russia's wheat shipments and nearly a third of Egypt's total yearly wheat consumption at 14 million tonnes.
Much of the wheat Egypt buys goes into a subsidised bread programme that lets millions survive on low pay.
(To see a graphic of Russia's wheat exports to Egypt click on: http://graphics.thomsonreuters.com/069/UK_RSNWHT0609.jpg)
"The price advantage compared to other origins is too big for one of the world's largest wheat buyers to shut the door on the cheapest origin worldwide," a senior French trader who often deals with Egypt's main grain buyer, the General Authority for Supply Commodities (GASC), said.
"Price will remain the key word for the GASC," he added.
TIP OF THE ICEBERG?
Trade between Egypt and Russia turned sour last month when Egypt's prosecutor seized a 52,500 tonne shipment of Russian wheat imported by a private local dealer, Egyptian Traders Co, after dead bugs and impurities were found in the cargo.
Other seizures followed, which raised doubts about the quality of Russian wheat as a whole, prompting top Russian officials such as the first deputy prime minister to insist that all grain sent to Egypt met quality standards.
Last week Egypt's prosecutor said he was probing the documentation of the shipment for forgery.
Swiss cargo inspector SGS later told Reuters a falsified SGS quality certificate had been used on the shipment imported by Egyptian Traders Co. The importer said the documents for his wheat shipment were definitely valid.
Sources were divided on whether or not this suspected instance of a forged shipping document was an isolated case or whether there was a possibility more could be uncovered.
"This is probably the tip of the iceberg of what is going on in Egypt," said Chris Vanhonacker, Geneva-based commercial director of Russian grain firm Rosinteragroservis (RIAS).
RIAS says it is the second largest supplier of Russian wheat to Egypt, not far behind Switzerland's Glencore. It was also the seller of the cargo that is under investigation, which it says originally carried valid quality certification from Dutch inspector Control Union issued in Russia.
"I think the problem is wider than just one company," said Mustafa Bakry, lawmaker and editor-in-chief of Egypt's Al Osboa newspaper, who brought the case to the public prosecutor.
MORE CONTROLS
Many traders in large international trading houses said the problem was probably isolated and they expected Russia to regain its standing in the grain trade with Egypt.
"This is a private problem that does not concern Russian wheat as a whole," another senior French grain trader said.
France, the United States and Canada were the main suppliers of milling wheat to Egypt in the past, before being supplanted by Russian wheat exported via the Black Sea.
"I'm highly, highly sceptical that this is going to result in Egypt buying a lot more non-Black Sea origin products," a U.S. trader said, stressing that Egypt last year imported millions of tonnes of Russian wheat without a hiccup.
"Time will tell, but I wouldn't make any changes as to what Egypt would buy going forward."
The bilateral trade generated just over $1 billion last year and has earned Russia about $800 million in the current July 2008 season, based on an average free on board Black Sea Wheat price of $180 a tonne.
Russia's grain is attractive to Egypt as the Black Sea's proximity to the Middle East makes freight rates around $10 a tonne cheaper than those from the United States.
When GASC tendered on April 30, the cheapest free-on-board price for Russian wheat offered was $180 a tonne with a freight offer of $13.75 a tonne. The cheapest U.S. soft red wheat was $182.99 with a freight offer of $19.99 a tonne. Egypt's trade minister, who is also the chairman of GASC, said the organisation would not stop importing Russian wheat or change quality specifications.
The main change would concern the stringency of GASC's controls on the wheat it buys, analysts said.
"I think from now on GASC will pay more attention to the quality and local traders will step down, allowing big traders to ship Russian grain to Egypt," Andrei Sizov, the chief executive officer of analysts SovEcon said.
GASC has not tendered for wheat since the end of April but Egypt's social solidarity ministry said on Sunday the country had enough strategic wheat reserves to last until the end of 2009.
For a Timeline of the Egypt, Russia grain spat please double-click on
For a factbox on Egypt's consumption and import system as well as Russia's wheat output and exports, double-click on.
(Additional reporting by Maha El Dahan in Cairo, Valerie Parent in Paris, Aleksandras Budrys in Moscow, Karl Plume in Chicago, Michael Hogan in Hamburg and Pavel Polityuk in Kiev, Editing by Anthony Barker and Veronica Brown)