July 29, 2008

Malayan Flour Mills Berhad, one of Malaysia's top three wheat importers, expects initial uncertainties to emerge in Australia's deregulated bulk wheat trade, and to buy from more than one exporter, managing director Teh Wee Chye said on Tuesday.

Malayan Flour Mills buys about 500,000 tonnes of wheat a year, of which more than 60 percent usually is sourced due to proximity from Australia, where exports were deregulated on July 1, ending a 70-year export monopoly operated by AWB Ltd.

Teh said the nature of the former marketing monopoly was quite efficient, and while he expects some initial uncertainty to develop in the new deregulated trade, he also expects and wants any ructions to settle and steady over time.

"We would like to explore more than one customer (Australian seller) and see how this whole thing pans out," he told Dow Jones Newswires on the sidelines of an Australian Grains Industry Conference.

Over time, as the changes to export arrangements bed-down, he expects to see a gradual convergence and likely consolidation among the four major Australian grain companies, namely AWB, ABB Grain Ltd. (ABB.AU), GrainCorp Ltd. (GNC.AU) and unlisted Cooperative Bulk Handling Ltd.

Other companies will also seek accreditation as exporters, he said.

"We will have to buy in four months time when the crop is made and hopefully it's a huge crop that will give everybody a good break," he said, in part reflecting on the drought-reduced crops in the past two years and the subsequent strong push higher this gave to world prices.

As a customer of Australian wheat, Malayan Flour Mills doesn't want to see too many changes develop in the trade or too much uncertainty, he said.

In going through this period of deregulation, Malayan Flour Mills wants Australian exporters to maintain consistency of quality of shipments, operate an efficient supply chain, manage customer relations well and put in place a process for conflict resolution in the event of a trade spat developing, he said.