May 23, 2007

High prices for India's wheat tender

Though there were seven bids received by India for wheat tender, its prices has soared by 20 percent than those paid last year as trading firms, including Glencore and Cargill bid at between US$265.50 to US$296 per tonne, according to trade sources.

India has paid an average US$230 per tonne for imports in 2006 when it was forced to tap global markets for 5.5 million tonnes.

India is looking to import one million tonnes but traders say it will likely purchase more as local farmers was not able to fill the needed supply.

The country has been buying wheat for a second year to boost stock as demand has already exceeded production. The purchases come at a time when freight rates have climbed to more than a two-year high as China and India, the world's two most-populous nations, buy more grain and iron ore.

Wheat prices have advanced 11 percent in the past year due to adverse weather which damaged crops from US to Australia.

Indian output has been steady at 70 million tonnes annually while consumption has been steadily on the rise.

This year, the harvest is forecast at 73.3 million tonnes, up from 69.4 million in 2006, according to the farm ministry.