Iraq buys Australian, US, German wheat

BAGHDAD, Mar 29 (Reuters) Iraq bought 500,000 tonnes of wheat from Australian firms at 190 dollar per tonne and 450,000 tonne from U S firms at 189 dollar per tonne to complete a 1.6 million tonne tender issued in January, Iraq's Grain Board said.

It also bought 150,000 tonnes of wheat from Germany at 7 per tonne. The previous such purchase from Germany was in 2004.

''We have completed the procedures from our side and we have signed the contract to buy 500,000 tonnes of wheat from the Australian firms, but we still waiting for them to sign,'' Khalil Assi, the head of Iraq's Grain Board, told Reuters yesterday.

Assi said Iraq has also signed contracts with four U.S. firms -- Louis Dreyfus, Colombia Grain, ADM and Cargill -- to buy 450,000 tonnes. Iraq initially had said it was only buying 150,000 tonnes from U S firms because their prices were high.

He did not specify the German source.

''It's the crack in the monopoly. The Iraqi Grain Board has done more to change the global wheat trading scheme than anybody in decades,'' said Dawn Forsythe, director of public affairs for U S Wheat Associates, a wheat export promotion group.

''Cracking that monopoly is major if you're looking at the long-term future of grain trading,'' Forsythe said, referring to the Australian Wheat Board.

Wheat futures at the Chicago Board of Trade and Kansas City Board of Trade showed little reaction to news of the sale. The U S Agriculture Department last week announced sales of 250,000 tonnes of U S hard red winter wheat to Iraq.

Iraq earlier had bought 500,000 tonnes wheat from Canada at 187 dollar per tonne. Assi said the first shipments of the 1.6 tonnes wheat tender will arrive from Canada then from the U S around mid April.

''The amount (1.6 mln tonnes) will be enough for us for five months,'' he said.

Iraq had bought much of its wheat from Australia, but in recent months ruled out buying from Australia's monopoly supplier, AWB Ltd., after a scandal on kickbacks to the former regime of Saddam Hussein under the oil for food programme.

Australian Deputy Prime Minister and Minister of Trade Mark Vaile flew into Baghdad and met Iraqi leaders on February. 26 in a bid to save the market for Australian wheat.

Three large Australian grower-owned grain companies intended to work in collaboration to bid for the tender.

Barley exporter ABB Grain Ltd., Western Australian grains handler and trader Cooperative Bulk Handling and Eastern grains handler and trader GrainCorp Ltd. confirmed market expectations by saying they would work together for the sale.

The three groups store and handle the bulk of Australia's 22 million tonne wheat crop and trade internationally in various grains.

Iraq was Australia's largest market for wheat in the 1990s and early 2000s, taking up to 2.5 million tonnes a year.

Iraq began importing U.S. wheat after the toppling of Saddam in 2003, greatly reducing Australia's dominant share in one of the largest wheat import markets in the world.

Australia and the United States have been fiercely competing for the market.

REUTERS PDS RN0451