The Hindu Business Line : STC floats tender to import 10 l tonnes wheat

Woes on hand
Pakistan, Ukraine have banned exports; problems in buying US wheat.
Australian wheat will not be available before January; supplies limited.

New Delhi June 26 With international wheat prices ruling far too high, the Centre has decided to limit its immediate import plans to only 10 lakh tonnes (lt). This is as against its earlier proposal to float a 20-lt tender by the month-end.

Validity

The State Trading Corporation of India's (STC) 10-lt tender, floated on Tuesday, will open on July 4, with the bid offers to be valid up to July 10. The wheat is for delivery between August and November.

The STC tender comes at a time when wheat futures for September delivery at the Chicago Board of Trade (CBOT) is ruling at over $6 a bushel or $220 per tonne. The less preferred red wheat of Russian origin is similarly quoting at about $235 per tonne free-on-board. Taking freight cost of $60 per tonne from Russia and $75 per tonne from the US, the landed cost in India would be around $295 per tonne.

Worrying Scenario

Adding to this miscellaneous costs on account of demurrage, fumigation time, risk premium on account of tender cancellation (as it has happened previously), imported wheat will now be contracted for no less than $310 per tonne, according to trade sources. "The problem is that Ukraine and Pakistan have banned exports, while the problems with the US over phyto-sanitary and other quality issues are yet to be resolved. Further, Australian wheat will not be available before January. So, the suppliers are limited to only Canada, France or Russia," the sources said.

In fact, only recently the state-owned PEC Ltd was forced to cancel a tender for three shipments (of 40,000 tonnes each), after it received bids for Canada-origin wheat at around $317 per tonne. Drought conditions in Ukraine have also pushed up wheat quotes from Russia — the other major Black Sea origin supplier.

"All in all, imported wheat today will cost about Rs 13,000 per tonne, whereas millers in Bangalore, Chennai or Coimbatore are able to access wheat from Delhi or Uttar Pradesh now at Rs 11,800, after factoring in Rs 145-165 per tonne transport cost. Imports on private account are simply not feasible," the sources added.

Well-Stocked

What is more, most bulk users are well stocked and there is unlikely to be much pressure on prices. ITC alone is said to have purchased 7.8 lt of wheat, while Cargill has bought 2.5 lt, Britannia Industries and AWB Ltd 1.40 lt each and Delhi Flour Mills about 86,000 tonnes.

The Centre's own stock position is just about comfortable. Till Monday, the Food Corporation of India (FCI) and State agencies had bought 110.69 lt during the current marketing season (April-June). With opening stocks of 45.63 lt, total availability would be well over 155 lt, against last year's offtake of 117 lt. The 2008-09 marketing season will then start with stocks of 35 lt, which is marginally below the 40-lt normative minimum buffer.

Judged too high

In 2006-07, STC had contracted 55 lt of imports at an average landed cost of $205.31 per tonne. For the current fiscal, STC has floated two tenders, of which the first one for 10 lt was cancelled. The $263 per tonne rate negotiated for 3.06 lt out of the 10 lt was judged to be too high.

More Stories on : Wheat | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
NCDEX inks pact with polymer portal

AP posts record paddy procurement of 1 cr t

STC floats tender to import 10 l tonnes wheat

`Low' materialises, to decide monsoon onset in Delhi

Arecanut price dips

Centre assures steps to curb illegal areca import

Resistance from buyers hits spot rubber

AP to have horticulture university

Stagnant output

Cardamom plants hit by rains, gale

Pepper futures decline

New initiative

Indian guar gum, splits lose Chinese market to Pakistan