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Australia grain: Iraq, Pakistan, tantalise trade

SYDNEY: The Middle East is under the spotlight as wheat traders ponder the depth of Pakistan's pockets and exactly what deals might have been done between Australia and Iraq.

As AWB Ltd officials head home from the Middle East, the national wheat exporter is declining comment on whether new sales have been struck under Iraq's latest oil-for-food deal phase.

International trade talk has it that Australia has sold more than 600,000 tonnes of wheat to Iraq in the latest phase, which began in December.

The trade is also puzzling on Pakistan's wheat import plans.

"The question is how much they can afford," one private trader said, citing possible differences between Pakistan's agriculture and finance ministries.

A Pakistan Agriculture Ministry official was quoted from Karachi on Thursday as saying the country was set to import another 700,000 tonnes of wheat and that total imports could rise to 3.5 million tonnes by June.

LOW STOCKS

AWB said on Friday that the trade widely expected Pakistan to undertake greater imports and knew that the country's stocks were low. The Australian exporter anticipated bids for anywhere between 350,000 tonnes and 700,000 tonnes.

But two questions hanging over this were Pakistan's bank balance and a good-looking wheat harvest coming up in April.

"We'd be interested in the business if they did tender. There's a couple of things weighing down on expectations but the expectations are there," AWB's spokeswoman said.

Pakistan has already imported or has placed orders for 1.6 million tonnes -- 1.2 million tonnes from Australia and 400,000 tonnes from the United States.

Officials and trade sources estimated earlier this year Pakistan's import requirement for the year would be 3.2 million tonnes. When the military overthrew the government of Prime Minister Nawaz Sharif on October 12, the import target was set at 2.5 million tonnes.

The military-led government has tried to restrict imports by drawing on reserves. But the recent decision to import more was taken after the Agriculture Ministry warned reserves could dwindle by the end of the year, Pakistan wheat sources said.

Australia's own just-harvested crop, meanwhile, poses no supply problems. Private forecaster Australian Wheat Forecasters Pty Ltd's latest estimate puts the crop at 23.3 million tonnes, close to the record 23.7 million tonnes of 1996/97.

IRAQ DEALS SENSITIVE

On the Iraq trade, meanwhile, sources say reluctance by Australia's national wheat exporter to publicly talk about possible deals reflects the sensitivity of negotiations.

AWB, which normally fills about 50 percent of Iraq's wheat demand, has confirmed it exported 600,000 tonnes to 700,000 tonnes of wheat to Iraq under the last oil-for-food phase, but declined to comment on trade talk that it had sold more than 600,000 tonnes of wheat to Iraq in the new phase.

European diplomatic sources said Baghdad was expected to continue to fill more than 50 percent of its wheat demand from Australia, followed by Argentina and Canada.

Iraq is expected to buy 1.3-1.5 million tonnes of wheat under the latest UN oil-for-food deal.-Reuters