Australia concedes U.S. wheat credit luring for RI

Australia concedes U.S. wheat credit luring for RI

SYDNEY (Reuters): Wheat sales to Indonesia under the U.S. government's export credit system was seen as inevitable given the attractiveness of the credits, an official with Australia's wheat export board said yesterday.

He was commenting on trade reports that Indonesia was believed to have bought 50,000 tons of U.S. dark northern spring wheat.

"It's not surprising, it was a matter of time given the GSM (the U.S. export credit system)," Tim Dewan, Southeast Asia regional manager for the Australian Wheat Board (AWB) said.

The next question was what the impact of the sale would be on other sellers of wheat to Indonesia, "whether it will have an impact on Australia, Canada or Argentina or all of the above", Dewan said.

Indonesia was Australia's second-largest market for wheat last year, taking 2.5 million tons and giving Australia a 60 percent share of its market.

Indonesia normally buys some wheat from the United States, although last year the quantity was comparatively minor at about 100,000 tons.

Australian traders said the U.S. export credit system was very attractive to Indonesian buyers. The trade would be watching for whether Indonesian purchases of U.S. wheat increased.

"It's a matter of just how much they will purchase, whether they will go to 300,000 tons or beyond," a trader said.

Talk has been circulating Asian markets that Indonesia's reported purchase of 50,000 tons of U.S. wheat is part of larger planned purchases of about 300,000 tons.

Australia was still in the market for Indonesian sales, Dewan said. "(We're) still in there, still selling," he said.

The AWB, Indonesian buyers and the Australian government agency the Export Finance and Insurance Corp (EFIC) was presently working through mechanisms of the Australian government's own package to assist wheat exports to Indonesia, he said.

In early March the Australian government announced it would provide up to A$380 million insurance cover, through EFIC, to assist Australian wheat sales to Indonesia. The amount was subsequently increased to about A$500 million.