French wheat hit a four-month low on Wednesday, as Egypt, the world's largest wheat importer, said that it would be enforcing a "zero tolerance" policy on ergot contamination in wheat shipments.

March Paris wheat futures touched a 4-month low of $169.5 a tonne, but steadied later in the day, helped by some support from US markets.

Contamination fears

Gasc, the Egyptian state grain buyer, currently accepts cargos with up to 0.05% contamination with ergot, a grain fungus that can pose a threat to human health.

But Saad Moussa, the head of the agricultural quarantine authority told Reuters that cargoes containing any level of contamination would be rejected, and the Gasc vice-chairman Mamdouh Abdel Fattah said separately that a reduction in permitted ergot levels was under discussion.

Mr Moussa said that the zero tolerance for ergot contamination was designed to prevent contamination of Egypt's domestic wheat supply.

A cargo of French wheat was rejected last month, after trace levels of ergot were detected.

Delayed credit

The moves come at a difficult time for exporters to Egypt, after shipments were delayed in France.

Three shipments were held in French ports, as sellers awaited letters of credit from Egyptian suppliers.

There has been speculation that the delay was due to a shortage of foreign currency in Egypt.

But Mr Fatah told Reuters that the delay was due to administrative issues, not any lack of liquidity, and the letters of credit will be supplied shortly.

Paris wheat futures took some strength from US markets later in the day, with the march contract up 0.3% at E171.25 a tonne.