Agribusiness giant Cargill Inc has sold about 32,000 tonnes of Indian wheat to Indonesia in the first large shipment of the grain to Asia in at least seven years, traders said on Friday.
Asian buyers, including top importer Indonesia, are looking to buy Indian wheat as rising global prices have made shipments from Australia, the United States and Canada expensive.
The ship carrying Indian wheat from the western port of Kandla is scheduled to arrive at Indonesia's Tanjung Priok port in the first week of July.
"This is the first cargo sold in Asia since India started exporting," said one Singapore-based trader who was aware of the deal. "It is just a trial, and if successful, it should open the gates for more deals."
India lifted a ban on wheat exports in September but shipments from the South Asian nation have picked up in recent weeks as a rally in global prices and a weaker currency made Indian wheat competitive in the world market.
India, the world's second-biggest wheat producer, is struggling to trim bulging stockpiles that have filled up its storage facilities after the bumper harvests of recent years.
Benchmark U.S. wheat corn and wheat futures rallied this week on concerns over supplies from top exporters the United States and the Black Sea region.
Front-month wheat has climbed almost 20 percent in two weeks, its biggest two-week rally since August 2010, sparked by concerns over tightening world grain supplies.
Cargill sold the Indian wheat cargo to Indonesia's Bogasari flour mills, the traders said.
"Indonesia was one of the biggest buyers of Indian wheat when the country was last selling wheat in 2004 and 2005," said another Singapore-based trader. "Indian wheat is very competitive right now, there will be more deals."
FIRST INDIAN CARGO, MORE TO COME
India has been selling smaller cargoes in containers to Asia since September but this is the first bulk export since at least 2005, according to traders. India imposed a formal ban on exports in 2007.
Indonesia is forecast to import 6.8 million tonnes of wheat in 2012/13, up from 6.4 million shipped a year ago, according to the U.S. Department of Agriculture.
Indonesia buys the bulk of its wheat from Australia but rising prices have forced millers to turn to alternatives. Indian milling wheat was quoted this week at a discount of about $30 to $40 to Australian wheat in Asia following the rally in global prices and weakness in the currency of the South Asian nation.
In the cash market, Indian wheat is quoted at around $255 a tonne free on board (FOB), against $295 a tonne being offered for Australian wheat.
In the Middle East, Indian wheat is being offered at around $280 a tonne, including cost and freight (C&F), while rival Black Sea cargoes are being quoted at close to $315 a tonne.
As a result, the Middle East has bought around 200,000 tonnes of new-crop Indian wheat and more deals are likely, grains traders said on Tuesday.
Source: The Economic Times