The Hindu Business Line : Bidders quote high for STC wheat tender

New Delhi, July 4 The State Trading Corporation’s (STC) second 10-lakh tonne (lt) wheat import tender for the current fiscal has attracted seven bidders who have quoted prices between $317.95 and $370 per tonne cost & freight. This is way above the $265.5-302 a tonne range that was received in its earlier tender issued on April 30.

The latest tender, floated on June 26 and for which the bids were opened here on Wednesday, saw participation from global grain majors such as Alfred C. Toepfer International of Germany, Cargill Inc of the US, Glencore AG of Switzerland, Concordia Agritrading (a subsidiary of the Dutch trading house, Nidera) and Louis Dreyfus of France.

Supply tight

Not a single one of them bid for the entire 10 lt. In fact, the aggregate quantity offered by all the seven bidders came to only 9.2 lt — reflecting the tight international supply situation.

The price bids varied from port to port: $317.95 to $328.95 a tonne for delivery at Mundra, $328.95 to $348 at Kandla, $327.95 to $370 at Chennai, $322.95-$358 at Kakinada and $360-$370 at Tuticorin. The lowest bid of $317.95 per tonne is said to have come from Alfred C. Toepfer, which offered to supply 1.28 lt (of its total tendered 2.56 lt) for this rate at Mundra.

Compare this to the $263 a tonne that was negotiated by STC for 3.06 lt out of the 10 lt in its last April 30 tender (Mundra delivery) — a price that was rejected as too high by the Centre, leading to the cancellation of the tender on May 30.

“There might be a repeat this time too. It would be difficult to buy at $320 now, when only a month back a price of $263 was considered too high. At the most, they may settle for about two lt, simply to avoid the predicament of scrapping two tenders in succession,” trade sources said.

Landed cost

At $320 a tonne, the landed cost of the wheat (being imported on behalf of the Food Corporation of India) would be over Rs 13,100 a tonne. This is much more than the Rs 12,000 per tonne at which flour mills in the South are getting wheat from Uttar Pradesh delivered at their gate.

The present price bids are valid till July 10. Out of the total 10 lt, STC has sought delivery of 4.7 lt during August-September and the remaining 5.3 lt for October-November. “There are not too many origins from where wheat can be supplied for this period. Ukraine and Pakistan have banned exports. The Australian crop will not be fully ready till late-November. And since the quarantine procedural issues over US wheat is yet to be resolved, the choice of suppliers is now restricted to France, Canada and Russia,” the sources added.

Projections of global year-ending wheat stocks for 2007-08 touching a 30-year-low have further triggered a bullish sentiment in the commodity.

Buffer

The 2007-08 marketing season (April-June) opened with stocks of 45.63 lt in the Central pool, against 20.09 lt in 2006-07.

Further, FCI and State agencies have procured over 110 lt this season, compared to the 92.25 lt of 2006-07.

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