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India, China, Pakistan chase wheat buyers

Sambit Mohanty

Wheat exporters in India, China and Pakistan are intensifying their battle to boost market share in Southeast Asia where buyers are scrambling for alternatives to high-priced offers from key suppliers, traders said on Tuesday.

Limited supplies from Australia, the United States and Canada have not only given the three Asian exporters a chance to push sales, they are finding that buyers, who once shunned their cargoes on quality concerns, are willing to pay a higher price.

"How things have changed in just one year. Do importers still have the option of staying away from milling wheat supplies from India, Pakistan and China, citing quality issues?" asked one regional grains trader.

With global wheat prices touching five-year highs, sellers in India, China and Pakistan are finding no dearth of buyers.

Malaysian grain importers are stepping up purchases from India and Pakistan as the country's leading supplier, Australia, is expected to produce a crop less than 11 million tonnes compared with last year's 24.25 million, traders said.

China managed to sell some milling wheat last week to the Philippines, and there was market talk on Tuesday that Manila may be close to signing another import deal for 30,000 tonnes of milling wheat from China. Indonesian buyers were also negotiating some Chinese cargoes.

In addition to sales to Malaysia, Pakistan is finding a steady customer in Vietnam, which is also buying wheat from India, traders said.

"All the three exporters are not letting a single business opportunity go without making a huge effort to grab the deal," said one Singapore-based trader. "This is their chance."

Wide price gap

Although availability is limited, milling wheat cargoes from Australia and the United States were offered at levels higher than $225 a tonne C&F. Asian buyers have managed to get cargoes from Asian exporters at less than $175, traders said.

"The mix-and-match process is on," said one trader. "We are getting wheat also from France and other places, and trying to blend it with cheaper origins. But we are ensuring that the quality is maintained," said an official at a flour milling firm.

On Monday, the Trading Corporation of Pakistan sold 50,000 tonnes of wheat for export at $124.15 a tonne FOB Karachi.

"Some of that (Pakistani) wheat might go to Vietnam," said one trader. "Some 26,000 tonnes of Pakistani wheat is also going to Malaysia but I am not sure if it's from the latest tender."

Another trader said: "At one time, Asian buyers were not keen to pay $105 FOB for Pakistani wheat. Now they are more than willing to pay $125. This reflects the tight market."

One Manila-based trader said that Philippine buyers were not only looking at Indian wheat for feed use, but have started looking at some higher grades for blending in flour-making.

"We have bought some Indian wheat for 2003 shipments, for shipment until March," the Manila trader said. "This is done keeping in mind the fact that the supply situation may further deteriorate in the next year."

India has targeted to export 15 million tonnes of grains in 2002-03 (April-March) to cut huge stocks which stood at 55.4 million tonnes on September 1.

Asian traders said they were also eyeing the revised estimates of China's wheat stocks expected to be released by the US Department of Agriculture later on Tuesday.

Talk that the USDA may revise sharply upwards China's wheat stocks has already added a bearish note to wheat futures at the Chicago Board of Trade. Asian traders have speculated that Chinese wheat stocks could be more than 100 million tonnes.

"Sitting on these kind of stocks, I have no doubt in my mind that China will make some serious effort to export more. And I am sure they will succeed," said one trader. "India and Pakistan have to compete hard."

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