Grain fungus spurs rejection of some North Dakota wheat: merchants

CHICAGO (Reuters) - Elevated levels of the grain fungus ergot are showing up in spring wheat being harvested in south-central North Dakota, prompting grain elevators to impose discounts and even turn some truckloads away, grain merchants said on Tuesday.

Ergot is a common grain fungus but some major buyers, including top global wheat importer Egypt, have rejected cargoes with even trace amounts in the past.

Though confirmed in only one area so far, according to grain merchants who spoke to Reuters, the fungus could be another headache for U.S. wheat farmers whose grain has lost share in the 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 been seeing 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’s definitely widespread this year.”

Basnett said the ergot could be more pronounced in early-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 sell their grain at hefty discounts, or set it aside until they can blend 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 a notice sent to customers seen by Reuters.

“It seems like conditions were perfect this year (and) we are seeing more than we normally do,” said Penny Nester, a crop expert at North Dakota State University.

She said some elevators must levy discounts or reject loads due to a big U.S. spring wheat harvest.

“It’s a supply and demand situation; right now we have a lot of wheat coming in, so they can be choosy about what they accept,” Nester said.

Reporting by Julie Ingwersen; Writing by Michael Hirtzer; Editing by Tom Brown