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Indian buyers seek wheat from Europe as output falls elsewhere

Adani Enterprises Ltd. and R. Pyarelal International Ltd. together contracted 100,000 metric tons of French wheat in the past two weeks, according to the firms. Output in Australia, the world's second-largest wheat exporter, may fall to between 12 million to 15 million metric tons because of drought, AWB Ltd., the country's monopoly wheat exporter, said yesterday in a statement. That's half the amount of the previous crop. „Indian wheat purchases from France and Germany shot up as soon as the ban on imports was lifted by the government this year,” Sorin Vasloban, a commodities trader at Plantureux SA in Paris, said via telephone. „This was then sped up on the news of less wheat coming from Australia and less availability of wheat from Russia.” The increased imports may make India the world's biggest wheat buyer, surpassing Egypt. They also may extend the past year's 30% gain in prices on the Chicago Board of Trade and drive up prices on Euronext.liffe in Paris. A decline in production in Argentina, Europe and the US, the world's biggest wheat exporter, following dry weather has also boosted prices.
Wheat for December delivery rose as much as 3.5 cents, or 0.8%, to $4.2775 a bushel in after-hours electronic trading on the Chicago Board of Trade yesterday. „European wheat is easily available,” Atul Chaturvedi, president of Adani Enterprises Ltd., a commodities firm based in Ahmedabad, said in a telephone interview. „They are available in small parcels as well, and that suits Indian mills.” Milling wheat futures for January delivery gained €1, or 0.7%, to at €145.50 ($185) per metric ton at 12:43 p.m. in Paris. Prices have risen 32% this year. „It's bullish for the market in Paris,” Vasloban said. „Right now we have it confirmed that 100,000 metric tons will be sold, but this may increase to 200,000.” Australia had a record dry August and is facing the risk of a developing El Nino weather pattern. The likelihood of an El Nino weather event, which can cause drought in the Asia-Pacific region and flooding in the Americas, increased in the past month, Australia's Bureau of Meteorology said on September 26. Flour mills in south India have contracted to buy around 300,000 tons of wheat from Australia's AWB Ltd. „Indian mills are willing to pay a premium for Australian wheat because of its quality,” said Pramod Kumar, executive director at Sunil Agro Foods Ltd., a Bangalore-based flour mill.

European origin wheat was available for $225 to $235 a ton on cost and freight basis, while the Australian wheat was being offered at $200 a ton, Adani's Chaturvedi said. Indian importers have been buying wheat of Russian and Ukrainian origin or the Black Sea variety, but this week they rejected a 50,000 metric-ton import from Russia on the grounds of poor quality, according to Plantureux. This month, the Indian government, which began importing wheat in February after a six-year gap, gave private traders permission to buy wheat duty-free until December 31, to ease a shortage faced by the nation's flour mills and biscuit manufacturers. India's wheat output may have dropped 3.6% to 69.4 million tons in the harvest season that ended on June 30, according to the farm ministry. India may buy as much as 8 million metric tons this year, to become the world's biggest buyer, the US Wheat Associates said on August 31. India's government has bought 5.5 million tons this year. Imports by traders may double to 2.5 million tons by March if the duty-free incentive is extended, four of the five traders surveyed by Bloomberg News said this week. (Bloomberg)