May 21, 2007

 

India may get costlier wheat import bids at above US$260/tonne

 

 

The price of bids in India's coming tender to import up to 1.0 million tonnes of wheat are mostly seen higher, above US$260 a tonne, basis cost and freight, up from an average cost of US$205/tonne in 2006, government and industry officials said Friday (May 18).

 

Officials said bids could be more competitive price-wise if US origin wheat is offered in the tender, though some traders believe that is unlikely.

 

"Officials from our Agriculture Ministry are currently visiting the US to discuss procedural issues for quality certification with their counterparts there," said a senior Indian government official.

 

He said the suitable grades of US wheat will cost India around US$261/tonne including a freight of around US$75/tonne.

 

The official said India and the US are trying to agree on a quality certification procedure that is acceptable to both countries.

 

Last year, India imported 5.5 million tonnes of wheat but none from the US because that country considered some of the quality norms as stringent.

 

A tender issued by State Trading Corp on behalf of the government to import up to 1 million tonnes of wheat closes Monday.

 

Most bids that are likely to be received in the tender will be between US$255/tonne and 290/tonne, said an official of one of the international trading companies that plans to participate in the tender.

 

An analyst put the range between US$260/tonne-US$280/tonne and another analyst between US$270/tonne-US$300/tonne.

 

Canadian wheat seen competitive, Australia unlikely

 

"Unless changes are made in the tender document, it seems too late for wheat of US origin to be offered under this tender," said an international trading firm's Mumbai-based official.

 

He said Canadian wheat stands a good chance of getting through as it will cost around US$270/tonne, cost and freight, for delivery in panamax vessels carrying over 65,000 tonnes.

 

The official said wheat of Pakistani origin will be cheapest at around US$243/tonne, C&F, but a large risk premium may have to be added due to uncertainty over clearance at Indian ports.

 

The availability of wheat from Pakistan in bulk is also uncertain, he noted, and said that currently it is being shipped to India under private contracts, in containers carrying around 22 tonnes each.

 

He said Australian wheat, if offered, may be at prices around US$270/tonne, C&F, though actual sales seem difficult due to limited crop availabilityin that country.

 

In 2006, Australia's AWB Ltd was the largest supplier to India's State Trading Corp by volume at around 1.595 million tonnes.

 

However, a small part of the supplies to India were sourced by AWB from European countries such as France in 2006.

 

Officials in Indian commodities trading firms expect that AWB could to an extent, offer non-Australian wheat in the coming tender. AWB officials couldn't be immediately reached for comment.

 

Officials of Indian trading companies said French wheat is currently being offered at around US$211/tonne, free-on-board and a freight of around US$70/tonne will also have to be factored in for delivery in India.

 

They said another competitive origin is likely to be countries around the Black Sea.

 

The new harvest is available at around US$198/tonne and the previous year's crop at around US$210/tonne, FOB, while freight costs will entail an additional US$50-US$55/tonne.