Grain fungus spurs rejection of some North Dakota wheat -merchants

By Julie Ingwersen CHICAGO, Aug 14 (Reuters) - Elevated levels of the grainfungus ergot are showing up in spring wheat being harvested insouth-central North Dakota, prompting grain elevators to imposediscounts and even turn some truckloads away, grain merchantssaid on Tuesday. Ergot is a common grain fungus but some major buyers,including top global wheat importer Egypt, have rejected cargoeswith even trace amounts in the past. Though confirmed in only one area so far, according to grainmerchants who spoke to Reuters, the fungus could be anotherheadache for U.S. wheat farmers whose grain has lost share inthe world market due primarily to high prices. North Dakota is the top growing U.S. state of spring wheat,a high-protein variety milled into flour for specialty breads,bagels and pizza dough. A grain elevator operated by CHS Inc in Sterling,North Dakota, was already rejecting some wheat deliveries,according to elevator manager Eric Basnett. "It's pretty prevalent. Some of the heavier loads we've beenseeing are anywhere from 0.08 to a 1.15 (percent ergot content).The limit with no discount is 0.05 or less," Basnett said. "It'sdefinitely widespread this year." Basnett said the ergot could be more pronounced inearly-harvested fields. The U.S. Department of Agriculture on Monday said the U.S.spring wheat harvest was 35 percent complete. In North Dakota,the harvest was 29 percent done. Wheat infected with ergot forces farmers to either selltheir grain at hefty discounts, or set it aside until they canblend it with clean grain. A grain elevator in the town of Minto, North Dakota,reported seeing wheat with as much as 0.25 percent ergot.Anything more than 0.1 percent would be rejected, according to anotice sent to customers seen by Reuters. "It seems like conditions were perfect this year (and) weare seeing more than we normally do," said Penny Nester, a cropexpert at North Dakota State University. She said some elevators must levy discounts or reject loadsdue to a big U.S. spring wheat harvest. "It's a supply and demand situation; right now we have a lotof wheat coming in, so they can be choosy about what theyaccept," Nester said. (Reporting by Julie IngwersenWriting by Michael Hirtzer; Editing by Tom Brown)