Iraq Bypassing AWB for 500,000 Wheat

[clancey]

The following information was included in an article I wrote for my website today:


The Grain Board of Iraq says it is trying to buy up to 500,000 MT of Australian wheat from suppliers other than the Australian wheat marketing board, AWB Ltd. Over the weekend, Iraq said it wanted to buy 350,000 MT. It is looking for offers through Saturday (March 11). Companies expected to offer wheat include the Australian barley marketing board, ABB Grain Ltd., GrainCorp Ltd. and Cooperative Bulk Handling Ltd.

[clancey]

Following is the latest information on efforts to sell Australian wheat to Iraq:

The Grain Board of Iraq is still waiting to conclude a purchase of 500,000 MT of wheat from Australia. It will not deal with the country's wheat marketing board, AWB Ltd. This spurred Australian government approval for creation of a competing wheat exporting company. GrainCorp Ltd., ABB Grain Ltd., and Cooperative Bulk Handling Ltd. combined to create Wheat Australia Ltd. to sell to Iraq. Iraq is now waiting for the group to submit prices.

[clancey]

Finally, a deal has been concluded:


The Grain Board of Iraq paid U.S. $195 MT FOB for 500,000 metric tons (MT) of Australian wheat. Refusing to buy from the Australian wheat marketing board, the government allowed a consortium of companies -- GrainCorp Ltd., ABB Grain Ltd., and Cooperative Bulk Handling Ltd. -- to create Wheat Australia to bypass the AWB to sell the wheat.

[clancey]

Here is the latest:

The Grain Board of Iraq finalized the purchase of 350,000 MT of Australian wheat, paying U.S. $190 MT to Wheat Australia, a consortium comprising GrainCorp Ltd., ABB Grain Ltd., and Cooperative Bulk Handling Ltd. It had been negotiating to buy 500,000 MT

[Dave]

Very interesting. We aren't hearing much about this in our media here - I think they have all the stories they need coming out of the Cole enquiry :D.

[clancey]

They must be. I would have thought that the first major sale of wheat outside the AWB would be big news in Australia. Well, at least AgLinks participants are in the loop.

[Dave]

I did find this story (http://www.abc.net.au/rural/news/content/2006/s1619043.htm) on the ABC Rural site.

Pretty sloppy maths in that report. No currencies are mentioned - I assume the wheat price is in USD and the total sale figure is in AUD. It's about 10 million short of 100 million too but I guess the round 100 looks better :rolleyes:.

[Dave]

The latest on this is that the deal may yet fall through.

Full story (The Australian) (http://www.theaustralian.news.com.au/story/0,20867,19185152-601,00.html)

[clancey]

On Wednesday, the Grain Board of Iraq said it has suspended its latest 1.5 million MT wheat purchase tender until a new government is formed and a new contract committee is set up to review offers on tender and ratify purchases. Perhaps the Australian sale is caught up in this decision-making void.

[clancey]

Confusion reigns supreme over the recent sale of 350,000 MT of wheat by a consortium of Australian companies to the Grain Board of Iraq.

News reports from Australia have the consortium saying the deal has fallen apart, while Iraqi officials say they have agreed to all contract amendments proposed by the consortium and returned a signed contract to it Sunday, May 21.

It is inferred the Australian consortium is unwilling to accept the contract now that markets are closer to U.S. $205 MT than the $190 MT paid by Iraq. However, insiders say the problem is a "default fee" being sought by the Grain Board of Iraq.

[Dave]

Our media here are definitely confirming the deal has fallen through. I did see one report mention a 'late fee', to be paid by the Australian consortium for every day past the contracted delivery date if the shipment was delayed.

It's a shame the deal didn't happen but it's just one transaction - there will be others.

[nswnotill]

The way the futures price is going there will be plenty of other opportunities to sell the wheat.
The way the season is heading we may need the wheat ourselves! :eek:

[clancey]

It now appears the on again, off again sale of Australian wheat to Iraq is on again. Terms of the 350,000 MT deal for 10% protein wheat are now being finalized, according to ABB Grain Ltd., a partner in Wheat Australia Ltd. It says negotiations are already underway for further sales.

[Dave]

It is back on. Hopefully this is the last word on this :D.

Full story (ABC News) (http://www.abc.net.au/news/newsitems/200605/s1651017.htm)