Australian wheat prices took a hit this week because of weak demand and falling global prices, which will make it difficult for India to export some of its burdensome stocks, traders said.

Australian prime wheat was quoted at $272 a tonne into Southeast Asia, including cost and freight (C&F), while standard wheat was offered at around $265 and high-protein hard wheat at $310, in each case around $15 a tonne down from last week.

Indian wheat, which competes with Australia's standard wheat, was priced at around $275-$280 a tonne for Southeast Asia although no deals have been reported.

"We are expecting Australian wheat to start becoming competitive with the fall in prices this week," said one Singapore-based trader. "India might find it tough to sell."

There was talk of India resuming wheat exports after a gap of six months earlier in January after a rally in global wheat prices and a tax on Russian exports.

But benchmark Chicago Board of Trade wheat futures have slid almost 14 percent in January, the biggest monthly decline in more than three years. Wheat prices jumped by more than a fifth in the final quarter of 2014.

On top of the lower international prices, a decline in freight rates will make it even more difficult for Indian wheat to compete in Africa and the Middle East.

"The biggest advantage India had was lower freight costs in shipping from India," said one New Delhi-based grains trader. "This is gone as freight rates have fallen with lower oil prices."

U.S. crude oil futures have lost more 50 percent of their value since the middle of last year because of slowing global demand and a supply glut.

The bulk freight rate from India to Yemen is quoted at around $14-$15 a tonne, down from $16-$18 a tonne earlier, while the cost of shipping from Australia to Yemen has seen a bigger drop to $22-$25 a tonne from $35.

"The drop in freight costs from India has not been as much as we have seen from other origins," the New Delhi trader said.

In the feed grain market, South Korea has been snapping up cargoes of corn, which has dropped almost 7 percent this month.

The country's largest feedmaker, Nonghyup Feed Inc, purchased about 255,000 tonnes of optional-origin corn in a tender this week. The tender for up to 280,000 tonnes was for arrival in July and August.

Source:- reuters.com