Egypt Rejection of French Wheat Cargo Raises Supply Concerns

Egypt’s rejection of a French wheat cargo for fungus contamination is raising questions of how traders will supply the world’s biggest buyer of the grain.

A French vessel was stopped because it didn’t meet the Agriculture Ministry’s zero-tolerance requirement for ergot, a fungus that can grow on wheat and cause health problems, Eid Hawash, an spokesman for the agency, said Tuesday. The General Organization for Export and Import Control was notified by mail about a week ago, he said.

The issue is causing confusion among traders. Egypt’s General Authority for Supply Commodities, which runs international tenders to buy wheat, has allowed ergot up to 0.05 percent in the past and it’s impossible to guarantee that a wheat shipment doesn’t contain ergot, according to Michel Portier, the chief executive officer of Agritel, a Paris-based research firm.

As ergot is naturally present in wheat, maintaining the requirement means “there’ll be a lot fewer offers and prices will be higher,” Alexandre Boy, an analyst at Agritel, said in an interview on Tuesday.

The nervousness over ergot risk was reflected in the last wheat tender by the lack of offers compared to the previous ones, Swithun Still, director of Solaris Commodities in Morges, Switzerland, said by e-mail.