India's Australian wheat buying slows

Wheat imported from Australia is cheaper than domestic wheat in India, but buying has slowed due to concerns over quality and to lower prices expected as supply from the upcoming harvest enters the market.

 

"Earlier projections of large-scale imports were exaggerated. Mills in Tamil Nadu stopped making purchases after there were problems relating to quality,'' an executive at a global trading company said.

 

In some containers, the quality didn't match Indian specifications - soft wheat was mixed and the quality of the gluten wasn't in line with requirements, he said.

 

Flour mills in south India have purchased close to 100,000 tonnes of Australian wheat since October, of which around 60,000 tonnes has already been delivered at ports, he said.

 

Not more than 5,000 containers have been imported in the last four months, another trading executive said. In some shipments from west Australia, the gluten quality was bad, he said.

 

Flour millers in south India have purchased Australian prime wheat at US$285 a tonne on a cost-and-freight basis for containerised shipment in February.

 

Mills in Kerala have purchased Australian wheat for February shipment but they are not making any purchases for March shipment because by then, the harvest of the local crop will be under way in the central and western provinces.

 

Currently it is around INR500/tonne (US$10.80/tonne) cheaper for south Indian mills to import Australian prime wheat than to buy wheat from the latest crop in the western province of Gujarat, where the 2010 wheat harvest started late last week.

 

However, it is risky to buy imports for March shipment, which would be delivered in April, because prices may fall once the harvest in north India gathers steam.

 

This year, new crop wheat from north Indian province of Uttar Pradesh on a delivered basis is likely to be available for south Indian mills at INR13,500/tonne, up from INR12,800/tonne year earlier. Australian prime wheat is currently available at INR14,500/tonne.

 

"Our mill purchased 6,000 tonnes of Australian wheat, of which 2,500 tonnes is still to arrive. We will decide on further purchases only after a price evaluation of the latest crop," a flour miller in Tamil Nadu said.

 

On a delivered basis, Australia's hard wheat until recently was cheaper than India's 1482 high quality wheat from the western province of Rajasthan by at least US$75/tonne, but local prices may fall due to the upcoming harvest, he said.

 

Australia's prime wheat is cheaper on a delivered basis than the corresponding Lokawan wheat of Madhya Pradesh by around US$30/tonne.