Financial Daily from THE HINDU group of publications
Friday, May 12, 2006
Financial Daily from THE HINDU group of publications Friday, May 12, 2006 |
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Wheat Industry & Economy - Exports & Imports Agri-Biz & Commodities - Standards & Benchmarks Australian wheat deal facing trouble? Our Bureau
Issues at stake Three vessels loading wheat have been put on hold. STC may encash performance guarantee but India may not get the remainder 4 lakh tonnes wheat.
Chennai , May 11 Is the deal to import five lakh tonnes of wheat for the buffer stocks in troubled waters? Though a little over 91,000 tonnes of the $90 million (Rs 404 crore) wheat have been supplied, shipments of the rest of the consignment by Australia's monopoly seller AWB Ltd have run into problems. AWB Ltd on Thursday said some shipments of the grain due for export to India might be diverted to other countries due to quality concerns raised by India, agencies reported. Shipment of part of the 5,00,000-tonne contract has been delayed, Mr Christian Sealey, a spokesman for the Melbourne-based AWB, said.
Shipments on hold
Several shipments due to leave ports in Western Australia, South Australia and Victoria are on hold because of concerns about the quality of some of the grain. AWB is saying little about the problems, but has denied rumours within the grain trade that the remainder of the 500,000 tonne contract had been cancelled, as per media reports from Australia. "The delays occurred due to stringent quality specifications in the contract," Mr Sealey was quoted by Bloomberg. When contacted in New Delhi, Union Food Ministry officials pleaded ignorance.
Tender specifications
Sources connected with the contract said AWB had been finding it hard to meet the tender specifications. "The AWB official who signed the contract with the State Trading Corporation is no longer with the organisation. And after the Volcker report pinned AWB for influencing purchase of its wheat under the Oil-for-Food Programme, the Australians are very cautious in their deals. It is likely that the consignments at the port of loading did not meet specifications and therefore, they were not allowed to proceed to India," they said. Though sources said STC could encash the performance guarantee of $4.5 million (Rs 20.2 crore) executed while signing the contract in February to offer wheat at $178.75 a tonne, it would not solve the Union Government's problem. "What India needs is wheat and not money," the sources said. Shipments to India, at a time when there is a tight supply situation, are likely to be delayed, and the trade feels this could lead to further rise in domestic prices. Initially, when the tender was floated in February, the shipments were to begin in March and end by middle of this month. Subsequently, imports began in the second week of April and were expected to be over in early June. Two vessels are already unloading wheat at Chennai and Tuticorin ports.
Related Stories: More Stories on : Wheat | Exports & Imports | Standards & Benchmarks
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