Bunge, the international grain commodities trader, has issued legal proceedings against the Egyptian grain authority, GASC, in a case that will be closely watched by international grain markets. Bunge is taking a case against GASC after the grain authority rejected a 63,000t shipment of French milling wheat earlier this month.

Egypt rejected the wheat shipment from Bunge on the grounds that it contained too high levels of ergot fungus. Traditionally, Egypt has allowed traces of ergot up to 0.5% in wheat shipments, but it now appears that the country’s agriculture ministry is moving towards a zero tolerance policy on ergot contamination.

As Egypt is the world’s largest importer of wheat, the decision to reject the wheat cargo had a major effect on grain markets with wheat futures plummeting at the time. The uncertainty caused by the decision saw Egypt effectively barred from the wheat market by grain merchants with the country’s next two tenders for wheat shipments receiving no bids.

Bunge says the 63,000t wheat shipment, which is still tied up outside the Egyptian port town of Damietta, was compliant with the terms of the tender issued by GASC and will challenge the authorities decision to reject the wheat cargo in court in Egypt.