Iraq threatens to bar Australian wheat firms

Iraq has threatened to bar Australian firms from new wheat tenders if they back out of a deal to supply Iraq with 350,000 tonnes from a tender issued in January, an Iraqi trade ministry official said on Thursday.
Wheat Australia said it had abandoned talks over the sale of 350,000 tonnes of Australian wheat to Iraq earlier this week, after more than two months of negotiations stalled by a price dispute with the Iraqi Grain Board.
Khalil Assi, head of Iraqi Grain Board, told Reuters that Iraq had reviewed the contract, made some adjustments and then signed it, on Sunday, in the presence of the Australian ambassador. He said they had not heard back from the firms.
"If they do not supply this tender then we will stop giving them any (deals) in new tenders," he told Reuters.
The Iraqis had earlier said that the price had been set at $190 a tonne, but Wheat Australia said on Monday that world prices had risen to around $220 a tonne for the grades of wheat involved.
Iraq imports around 3 million tonnes of wheat a year to help feed a population of 27 million people. The government has been tendering for at least one million tonnes, every two months, in a plan to raise imports to build up reserves after shortages plagued the state-run food distribution system over the past two years.
Assi said that the Australians wanted to sell at $204 per tonne but he declined to say whether Iraq had changed the price from $190 a tonne in the amended contracts signed on Sunday.
An Iraqi government committee to discuss contracts met earlier this week under the new government but it did not discuss wheat contracts.
If the deal fails, Iraq will have to look at other suppliers for the 350,000 tonnes. US companies such as Cargill Inc, Archer Daniels Midland Co and Louis Dreyfus Corp could be possible winners of the business, US and Middle East trade sources said.
"Iraq still has an appetite for US and Canadian wheat but the risk reward better be big," said a US wheat trader. US wheat would come at a high price as concerns over a small hard red winter crop have driven prices near a 10-year high. In addition, exporters usually add a premium when selling to Iraq due to the country's political and economic instability.
To complete January's tender, Iraq had already bought 450,000 tonnes from US firms at $189 a tonne and 150,000 tonnes of wheat from Germany at $187 a tonne and 500,000 tonnes from Canada.
Australia had been Iraq's dominant wheat supplier for years, a position that has been gradually eroded after the US-led invasion of Iraq after a scandal on kickbacks from Australia's monopoly supplier, AWB Ltd, to the former regime of Saddam Hussein under the oil-for-food programme.