March 3, 2010

US may lose dominant share in Iraqi wheat market


Iraq's recent snub of US wheat may reflect a trend which will see American farmers lose dominance over exports to the Middle Eastern importer.

Iraq had split a 380,000-tonne wheat order between Canada, Russia and Australia, leaving US purchases behind historic rates. The country, which usually buys up to 60% of its wheat imports from the US, has bought only 155,000 tonnes of US wheat so far in 2009-10, a drop of 87% on-year.

The decline reflects Iraq's increasing price sensitivity, which may lead the country to purchase more of Black Sea grains in future tenders.

Australia's commodities bureau Abare noted in a report that Russia and Ukraine have raised their share of global wheat trade to 22% from a mere 2% over the past 10 years. The proportion for barley has soared from 5% to nearly one-half.

The quality of Black Sea wheat and barley is generally lower than those produced in the US and Australia, but Black Sea grains are price competitive and have begun to gain market share from traditional exporters, particularly from the US. Traditional exporters are likely to face increased competition from the Black Sea area in the foreseeable future, according to the report.