In search of quality and price

Iraq remains wedded to large purchases of US winter wheat even as it explores other suppliers as part of establishing a free market system, members of a visiting Iraqi grain marketing team said.

Adnan Al Bayati, general manager at the Iraq Ministry of Trade, and Haider Al Omr, marketing manager at the Grain Board of Iraq, said that, although Iraq sees the United States remaining a major supplier, it is looking at different origins to meet needs for both quality and a "reasonable price."

The two, however, stressed that they are not policy makers and not offering an official government position.

Iraq last month bought 100,000 tonnes of Russian wheat at around $340 per tonne, the second purchase of European origin wheat in less than a month.

"This is according to the policy adopted right now to take advantage of... free market trade," Al Omr said through an interpreter.

Iraqi Trade Minister Abdul Falah Hassan Al Sudani said in London last month that the country's 2008 wheat production looked set to fall to 1 million to 1.5 million tonnes due to drought, from 2.3 million tonnes last year.

Iraq imports about about two-thirds of its total wheat needs. Most domestic Iraqi wheat is grown in the northern province of Mosul and it is primarily a semi-hard white wheat, which is combined with hard red winter wheat in production of the country's popular flat bread.

For the 2007/08 (June-May) marketing year, Iraq purchased about 2.164 million tonnes of US hard red winter wheat. So far in the 2008/09 marketing year, Iraq has purchased 1.149 million tonnes of US HRW wheat.

Political reasons

Since the US led invasion of Iraq in 2003, the country has bought large volumes of US wheat for political reasons even when European wheat was cheaper.

Louis Dreyful Commodities Vice President Steven Campbell, who met with the Iraq team in Kansas City last Monday, said Iraq was an important US customer and there was little concern about losing Iraq business to Eastern Europe anytime soon.

Only the United States, Australia and Canada are positioned to meet Iraqi quality specifications, he said.

"Over the past three years Iraq has become a very important destination for the US HRW wheat market," said Campbell.

"When you look at who can meet the quality specifications... I don't think there is a big concern that we are going to lose that business."