May 9, 2007

 

India to buy wheat from US

 

 

For the first time after fifteen years, India may resume imports of wheat from the United States in its effort to build reserves as surge in demand exceeds from its current production.

 

The world's second-biggest wheat consumer has submitted a tender last week for 1 million tonnes, one-third of this year's target.

 

The US Wheat Associates said differences over quality norms have prevented US growers from selling to the south Asian nation for more than a decade.

 

T Nanda Kumar, India's federal food secretary said India won't change its rules on wheat imports but will look for a way of resolving the quality problem.

 

The resumption of wheat supplies to India may improve shipments for major grain companies such as Cargill and Archer Daniels Midland. Last year, Cargill has bought wheat from other countries to supply to India after it barred cargoes with weed seeds, said Mark Samson, vice president for South Asia at the US Wheat Associates, a growers' lobby. 

 

This is the second year India is importing wheat and total US purchases may reach 5 million tonnes, according to Alok Sinha, chairman and managing director of Food Corporation of India. The nation bought 6.5 million tonnes last year, the first time it imported wheat in seven years. 

 

The government has also one more option to choose from at a time when global wheat production is falling, said Siddharth Agarwal, director at R Payrelal Import & Export. The company imported 150,000 tonnes last year and has contracted to buy 10,000 tonnes from Pakistan this year. 

 

Kumar said the government is weighing the size of purchases from domestic farmers before inviting bids to buy more wheat. 

 

He added traders may be allowed to offer US wheat in future tenders, he said. 

 

Wheat purchases by the government reached 8.81 million tonnes this year, compared with 9.11 million tonnes a year earlier, the food ministry said yesterday. The government plans to buy 15.15 million tonnes this year, up from 9.23 million tonnes last year, according to junior food minister Akilesh Prasad Singh.

 

India is forecast to produce 73.7 million tonnes of wheat this year compared with 69.35 million tonnes a year earlier. 

 

Wheat futures for July delivery fell 1.8 per cent to US$4.8475 a bushel in after-hours trading on the Chicago Board of Trade at 3:41pm Mumbai time. 

 

Prices have risen 30 per cent in the past year as bad weather damaged crops from the US to Australia.