Australia sends disputed India wheat elsewhere

SINGAPORE, May 17 (Reuters) Australia has diverted two shiploads of wheat originally sold to India but the contracts are unlikely to be cancelled as talks continue to resolve a dispute over grain quality, AWB Ltd. said on Wednesday.

AWB, Australia's monopoly wheat exporter, was also negotiating to send two further shiploads of wheat contracted by India to other destinations, AWB spokesman Christian Sealey said.

Sealey said disagreements between Australia and India over contract specifications were still not resolved, and were now seen unlikely to be settled soon.

''We think it will be going on for quite a while,'' he said.

He would not disclose where the wheat had been sent to, or give other details.

However, he said AWB had other wheat available for India if the dispute is resolved.

Indian officials complained in late April about pesticide content in Australia's first two shipments of around 100,000 tonnes in a 500,000 tonne tender awarded in early March.

These shipments are now being discharged at India's Chennai and Tuticorin ports.

But delays in shipping the remaining 400,000 tonnes of wheat to India was due to ''stringent quality specifications'' in the contract, Sealey said.

Sealey said the issue had not been settled despite statements by a top government official in New Delhi on Tuesday that India had no plans to cancel wheat shipments from Australia and that it was optimistic it would get all of the wheat under the contract.

Australian traders said the shipments were being held up due to different interpretations in the contract of the term ''zero tolerance'' for weed seeds, pesticides and other material in wheat shipments.

India has also floated a tender to import an additional three million tonnes of wheat. Australia and the United States are expected to compete to fill that order, although Chicago traders say that U.S. exporters are wary of strict conditions which might be involved with the 0 million deal.

Australia, the second-biggest exporter after the United States, has a freight advantage in sales to India but needs to overcome India's concerns about quality, traders said.

Reuters