Asia Grains-Australian wheat prices rise, market eyes Indian supply

* Australian wheat up $12/T for Dec shipment

* Frost damage in Australia's eastern grain belt

* Market eyes Indian wheat on talk of lower prices

By Pankaj Katba

Australian wheat prices firmed this week as frost damage to east coast crops fed supply worries, while Asian millers are likely to snap up wheat cargoes from India, as it moves to cut prices.

Australian prime wheat prices rose $12 a tonne to $297 free on board for December shipment and Australian prime hard wheat with 13 percent protein gained $10 a tonne to $355. Australian standard wheat was quoted at $291 a tonne FOB.

"There was some damage to wheat in New South Wales and Victoria because of the frost," said one Sydney-based trader. "We are seeing prices in Australia move higher even though the global market has eased."

Australia has kicked off an early harvest in Queensland and New South Wales, with farmers reporting higher protein in grain but lower yields due to hot weather, traders said.

More than half the wheat harvested in Queensland is of the prime hard variety with protein content exceeding 13 percent.

Besides frost damage, Australia's wheat crop faces a threat from hot and dry weather.

Most of Australia is forecast to experience hotter and drier conditions than normal over the next three months, the weather bureau said on Wednesday.

Chicago Board of Trade front-month wheat has given up 1.2 percent this week, weighed down by expectations of growing competition from Indian wheat supplies in the global market.

INDIAN WHEAT

India's cabinet will soon consider a 13 percent cut in the floor price for wheat exports, two government sources said on Thursday, potentially boosting supplies from the world's second-biggest producer.

Buyers are likely to bid heavily for tenders called by India's state-run trading companies.

"Buyers will bid for Indian wheat at around $280 to $282 a tonne FoB, going by current prices," said a trader in Singapore.

The State Trading Corporation of India issued a global tender to export 120,000 tonnes of wheat from the west coast, while PEC floated two tenders offering a total 160,000 tonnes from both east and west coasts.

"There will be good demand for Indian wheat in Southeast Asia and the Middle East for lower-grade milling and feed," a second Singapore-based trader said. "It will be a relief for millers as global supplies are getting tighter."

CBOT wheat hit a four-month high of $7.11-1/4 a bushel on Monday, fuelled by concerns that harsh weather in Argentina, Australia and the Black Sea could damage crop prospects and boost export deals for the United States.

Black Sea wheat was offered around $320 a tonne, including cost and freight, to Southeast Asia, unchanged from last week.

"Supplies from Russia and Ukraine are getting tighter as farmers have slowed selling," said the first Singapore trader.

South Korean flour millers bought 25,500 tonnes of Canadian milling wheat and a combined 54,600 tonnes of U.S. milling wheat via tenders that closed on Wednesday.

In the feed grain market, the Korea Corn Processing Industry Association bought 55,000 tonnes of corn in a private deal this week after having rejected all offers in an international tender for the same volume.

The food-grade corn, which can be sourced optionally from the United States or Brazil, was bought from Cargill at $254.70 a tonne C&F.