U.S. wheat moves on RI 'devastating': AWB

U.S. wheat moves on RI 'devastating': AWB

SYDNEY (Reuters): The United States was likely to displace
Australian wheat from the Indonesian market by placing half a
million tons in a short period into a market which would take
only four million tons a year, AWB Ltd. chairman Trevor Flugge
said.

Flugge, chairman of the formerly-named Australian Wheat Board,
was commenting on U.S. government assurances that its donations
of wheat to needy countries would not interfere with Australia's
grain markets.

"If the U.S. donates more wheat to Indonesia as suggested it
could be devastating," Flugge said in a statement.

The U.S. government has said it would donate 500,000 tons of
wheat to Indonesia as part of a 2.5 million ton package to nine
nations suffering food shortages.

About 1.5 million tons of that aid is yet to be allocated and
there have been indications from Washington that another million
tons of U.S. wheat could find its way to Indonesia, Flugge said.

"Australian wheat growers will now require a lot of convincing
if they are to believe this is merely an altruistic exercise on
the United States' behalf, especially given the comments in
support of the exercise by U.S. Secretary of Agriculture Dan
Glickman," Flugge said.

Glickman and U.S. President Bill Clinton had specifically
referred to the aid measures as a means of boosting prices for
U.S. farmers, but futures prices in the U.S. had fallen to their
lowest level in seven and a half years since the donation scheme
was announced, Flugge said.

Glickman said the package would "...be used for foreign food
donations, opening new export channels for American farmers",
Flugge said in the statement.

Indonesia was consistently one of Australia's top five wheat
customers, purchasing around 2.5 million tons of wheat each year
worth close to A$600 million, Flugge said.

Indonesia purchased a total of 4.2 million tons of wheat last
year. In the past, the U.S. had been unable to compete with
Australia for quality and timing of deliveries in Indonesia, he
said.

"The impact of Australia having to find a home for half a
million tons which it may not be able to sell to Indonesia will
be significant in a year when we too are looking at producing a
big crop," he said.

The AWB could possibly have to revise its pool price estimates
because of the U.S. actions, he said.

AWB's successful tender for 270,000 tons of wheat to Indonesia
last week indicated that there was still commercial demand for
wheat in Indonesia, he said.