CHICAGO/PARIS - Bunge Ltd will deliver a cargo of French wheat that Egypt rejected in December to Spain, in a further sign the agricultural trading house has been unable to resolve a dispute with Egypt over the quality of the grain, U.S. and European traders said.

Bunge, one of the world's top grain traders and processors, reached an agreement with the owner of the ship carrying the rejected wheat to deliver it to another client in Spain, a trader with knowledge of the deal told Reuters.

A Bunge spokeswoman in the United States did not respond to questions about the cargo this week.

Chandris Hellas Inc, the ship's owner, also did not respond to requests for comment.

The vessel, named Amira, is estimated to arrive on Friday in Tarragona, a port city in northeastern Spain, according to Reuters shipping data. It temporarily stopped near Malta on its journey from the Egyptian port of Damietta, the data show.

Traders said the grain, which Bunge sold to Egypt as milling wheat for human consumption, will likely be delivered as feed wheat for livestock.

"It is always difficult to sell wheat for food which was rejected by another buyer for quality reasons," a trader said.

Bunge launched legal proceedings against Egypt's state grain buyer after inspectors rejected the cargo for containing too much of a common fungus known as ergot.

Confusion over Egypt's position on ergot levels has disrupted wheat tenders, raising the possibility of a shortage of grain that could pose a political problem for President Abdel Fattah al-Sisi. The impoverished population relies on highly subsidized bread.

Bunge has said the quality of the rejected French wheat met the terms of Egypt's tender and that the company wanted to complete delivery of the rejected cargo.

Discussions about Bunge sending Egypt a replacement cargo ended with no agreement, the country's state grain buyer said last month.

On Tuesday, Egypt bought 180,000 metric tons of Romanian and Ukrainian wheat in its latest tender.