Bogasari, a subsidiary of food giant PT Indofood Sukses Makmur, was previously said to have given ambiguous signals on its stance over Australian wheat imports. But the source said the company had confirmed its new policy to switch away from Australian wheat.

"What can be confirmed is that (Bogasari) is looking for other wheat sources," the source told Reuters by telephone. Indonesia has already suspended security ties with Australia and delayed sending its new ambassador there because of what it calls Canberra's overreaction to the East Timor crisis. Australia was among Western donors that pressured Jakarta to reluctantly invite an international force into East Timor to end a wave of anti-independence violence.

Australia leads the force. The Australian Wheat Board said on Wednesday thata Bogasari ship was being loaded with wheat in Western Australia while a second ship was sailing there to pick up another consignment. It also voiced confidence that Australia's big wheat export trade with Indonesia would not be disrupted despite rising tensions between the two neighbours. But the source said the wheat being loaded in Western Australia came from old contracts which had been delayed by shipping bans imposed by Australian trade unions last month. Bogasari has said it has no more purchase contracts for Australian wheat.

"The wheat is from the old contracts whose shipments have been delayed because of the ban," said the source, adding that Bogasari would diversify imports to suppliers in Europe, the United States, Canada, Argentina and other countries. Last month, Australia's dock union halted wheat shipments when it banned virtually all trade with Indonesia to press Jakarta to accept the international force in East Timor. The bans were lifted on September 18 after Jakarta agreed to the force.Wheat is at the heart of a broader Indonesian-Australian trade dispute also involving cotton and sugar. Smaller Indonesian flour mills also say they will stop buying Australian wheat.

Australia exported 1.7 million tonnes of wheat to Indonesia, mainly to Bogasari, in 1998/99, down from 2.4 million tonnes in 1997/98 when Indonesia was Australia's main export market. A wave of anti-Australia protests have been mounting since Canberra spearheaded the U.N. multinational force in East Timor.

Indonesian students threw three Molotov cocktails and some rocks at the Australian embassy in Jakarta on Thursday. Several local trade groups, including the Indonesian Chamber of Commerce and Indonesian Textile Association, have urged their members to look outside Australia for raw-material supplies. Trade and Industry Minister Rahardi Ramelan said on Friday he would step up efforts to cut imports from Australia.

"Now Indonesian businessmen have been hurt. They have to face boycotts. You cannot let these things happen,let alone I," Ramelan told reporters in Jakarta. "I have to safeguard our industry. The availability of raw materials has been hurt. This can be dangerous," Ramelan said.