March 4, 2004

 

 

Asia Feed Wheat Supplies To Increase On Indian And Chinese Crop

 

Supplies of feed wheat in Asia may increase in two months time when the new Indian crop is harvested and China releases some for overseas sales, regional traders said on Thursday.

 

India is heading for a record wheat crop of around 76 million tonnes this year, up from last year's 69 million, with the harvest expected to kick off in April.

 

Regional grain traders are also hoping that China may try to export some lower grades of the grain after it replenishes its stocks by importing higher grades for flour milling from Australia, United States and Canada.

 

These factors have encouraged some Asian feed wheat suppliers to offer forward shipments, but only in limited volumes.

 

"The supply situation is very tight at the moment but there is a feeling that it will improve somewhat," said one Singapore-based trader.

 

South Korea's Nonghyup Feed Inc bought 25,000 to 30,000 tonnes of feed wheat from Cargill on Wednesday at more than $180 per tonne C&F through private talks for arrival in late June.

 

"The cargo could come from either China or India although China looks like a strong possibility at this moment," said another trader, echoing views of South Korean grain traders.

 

U.S. soft red winter wheat, the only other option for buyers, would cost nearly $250 a tonne due to surging freight rates and strong Chinese demand.

 

Traders said some Chinese feed wheat cargoes, contracted a long time ago, were currently loading for shipments.

 

"These are shipments for some old commitments but it is a sign that one can get cargoes after a long time. China might offer some more feed grade wheat," said one regional trader.

 

China, struggling to rein in rising food prices amid declining grain stocks, has snapped up deals to import about 4.5 million tonnes of milling wheat, but the exact shipment dates are yet to be decided.

 

Indian grain exporters are hoping that the government will announce a policy this month enabling private players to resume wheat and rice exports. But some traders said the quantity that India might offer are likely to be limited.

 

"With elections around the corner, the Indian government will be more concerned with meeting the demand in areas where there are shortfalls rather than allocating huge amounts for exports," said one Singapore trader.

 

The general elections in India are scheduled to be held in April and May.

 

Traders said they had so far not seen feed wheat coming out of Australia, which is expecting a record crop of 25 million tonnes, up from last year's drought-hit crop of 9.7 million.

 

"There is always a possibility that some feed wheat might come out of Australia but the incentive to export is less since they get good prices at home," said one regional trader.

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