For the first time since the ouster of Iraqi President Saddam Hussein, exporters on Tuesday made a large US wheat sale to Iraq - a market long off-limits to US farm exports and dominated by wheat-growing rival Australia.
The sale of 110,000 tonnes of US-grown hard red winter wheat was part of a World Food Program tender for milling wheat to avoid food shortages and build a local stockpile in Iraq. It will be delivered before the end of May, according to the US Agriculture Department.
US Wheat Associates, which promotes exports of US-grown wheat, said the sale signalled there would be spirited competition in the future to supply Iraq's food needs. It has complained of a bias toward Australian wheat.
"This is just the start to a new and vibrant wheat market in Iraq," said Paul Dickerson, vice president of the group. Iraq imports about 2 million tonnes of wheat annually.
Later in the day, Kirk Miller, general sales manager for the Foreign Agricultural Service, told a US wheat conference of a new opportunity for more wheat sales. The WFP was expected to issue a new tender for wheat that would include "a good chunk" of tonnage not filled by the latest tender, he said.
US trade sources on Tuesday said WFP would seek an additional 630,000 tonnes of wheat for quick delivery to Iraq.
USDA was "looking at establishing" export credits for Iraq, Miller said, but "it's not anything that's going to happen overnight."
Several steps, beginning with a rescheduling of $4 billion owed by Iraq to USDA, would be required. USDA also would have to name banks that could handle the US credits.
Libya also may become eligible for export credits, Miller said, once the United States reopens an embassy in Tripoli.
Libya imports about 1.5 million tonnes of wheat a year. US farm groups and exporters have fought for months to return to the Iraq market, which they dominated in the 1980s. Australia became the leading supplier after Saddam barred US wheat in 1998.
The 110,000 tonnes of US wheat bound for Iraq, equal to 4.04 million bushels, was worth about $15 million based on futures prices at the trend-setting Chicago Board of Trade.
By law, exporters must promptly report the sale of 100,000 tonnes or more of a commodity to the same destination in a single day. Sales of smaller amounts are reported on a weekly basis.
The first commercial sale of US wheat to Iraq in years took place in January when an international grain trader turned to US suppliers for 32,000 tonnes of wheat when Russian sources were unable to provide the grain for a sale through the UN's oil-for-food program.