India's move to cut wheat export prices has curbed a rally in U.S. wheat futures and cheap cargoes are expected to enter the market after tenders this month, but that is unlikely to erode premiums for higher-quality Australian supplies.
Traders say the Indian supplies will go largely into animal feed or to fill demand for lower-quality milling wheat, while Australian wheat will take care of higher-end demand for making noodles, bread and cakes.
Expectations that India would open the floodgates for wheat have reversed gains in Chicago Board of Trade futures, which have lost more than 8 percent since hitting a near-five-month high of $7.11-1/4 a bushel on Oct. 21.
The spot-month December contract was trading at $6.54-1/4 a bushel at 0640 GMT on Thursday.
"Australia is not expected to have large volumes of feed wheat this year although they have yet to go through the crucial harvest season," said one Singapore-based grains trader. "Indian wheat is going to be selling at a discount to U.S. soft red winter wheat and Black Sea wheat."
Australian wheat prices have held up thanks to strong demand led by China, which saw some 16 percent of its crop damaged by adverse weather earlier this year.
Australian prime wheat was quoted this week around $290 a tonne, free on board, while prime hard wheat with 13 percent protein was being offered around $351 a tonne.
"They probably won't steal a lot of business away from Australia. Indian wheat will enter the feed market while even our lower-quality Australian standard wheat will be bought by flour millers," said Andrew Woodhouse, a grains analyst at Advance Trading Australasia.
Source:- reuters.com
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