UPDATE 2-Egypt rejects French wheat cargo over ergot fungus level

* Cargo with 63,000 tonnes rejected at Safaga port -sources

* Wheat thought to exceed 0.05 pct limit on ergot fungus

* Ergot rules caused row between Egypt and traders in 2016 (Adds port source comments on rejection, request to re-test)

DUBAI/PARIS, April 9 (Reuters) – Egypt has rejected a French wheat shipment for exceeding authorized levels of the grain fungus ergot, sources said on Tuesday, in an echo of problems three years ago over testing rules in the world’s biggest wheat importer.

The cargo of 63,000 tonnes of French wheat was rejected at Egypt’s Red Sea port of Safaga and negotiations were underway to resolve the issue, the sources said.

“They found 0.1 percent ergot and the acceptable level is 0.05,” one source close to the matter said.

An official source at Safaga confirmed the rejection for 0.1 percent ergot content, saying unloading of the wheat had been refused. A request has been filed to re-test the cargo, he said.

The vessel, which loaded at the northern French port of Dunkirk, arrived at Safaga last week, traders said.

The wheat had been bought in an international tender by Egypt’s General Authority for Supply Commodities (GASC), they said. GASC was not immediately available for comment.

Egypt’s agriculture ministry, which oversees the country’s agricultural quarantine authority, was unavailable to comment.

Egypt, the world’s largest wheat importer, rattled the global market in 2016 when it reinstated a ban on even trace levels of ergot, which can cause hallucinations but is considered harmless at minor levels.

After several wheat import cargoes were rejected, the government later readopted an internationally recognized standard allowing up to 0.05 percent of ergot in wheat.

Traders said they were unaware of any further change in Egypt’s ergot policy.

Ergot is found in many grain producing regions worldwide and traders view a tolerance of trace levels as necessary to allow trade.

Egypt rejected a shipment of Romanian wheat earlier this year over a non-specified “quality issue”, which traders said was related to a measure of milling quality known as falling numbers.

The country had also rejected a French wheat cargo in 2017 for containing poppy seeds.

Reporting by Maha El Dahan and Nadine Awadalla; Additional reporting by Momen Atallah, Valerie Parent and Michael Hogan; Writing by Gus Trompiz Editing by Dale Hudson and David Evans

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