May 28, 2007

 

India wants imported wheat at not over US$265/tonne

 

 

India does not want to buy imported wheat at prices over US$265 a tonne from a recent tender issued to import up to one million tonnes, a senior government official said Friday (May 25).

 

"Only one of the companies, Glencore, has indicated that it may consider selling wheat around US$263.50/tonne for delivery in panamax vessels in (the western port of) Mundra, while the rest of the companies are not keen to scale down their price of bids," said the official.

 

Glencore officials couldn't be reached for comment.

 

"The government may buy all the volumes available at prices up to US$265/tonne and issue an additional tender for the rest," the official added.

 

The tender has been issued by State Trading Corp on behalf of the federal government and all bids have been over US$265/tonne.

 

In a tender issued in May last year, the government purchased 500,000 tonnes of wheat from Australia's AWB Ltd around US$187/tonne, cost and freight included, for delivery in panamax vessels at Mundra port.

 

In the past year, global wheat prices have firmed up, and sellers have now factored in suitable demurrage charges in anticipation of congestion at ports at the time of delivery, while AWB is not participating in this tender.

 

The government official said another bidder, Hamburg-based Alfred C. Toepfer, has so far not shown much inclination in bringing down the price of its bid for one of the ports from around US$267/tonne.

 

On May 1, Food Secretary T. Nanda Kumar told Dow Jones Newswires in an interview that "the 1-million-tonne figure is not sacrosanct. Actual purchases will be of any volume up to 1 million tonnes and will depend on the prices quoted by sellers."

 

The government official said the wheat import policy is still in accordance with the views expressed by Kumar at the beginning of the month.

 

He said the government has all the wheat it requires to run its subsidised sale programmes and at the same time maintain a buffer stock of 4 million tonnes.

 

"We are not desperate for wheat. Local procurement from farmers has reached 10.7 million tonnes, around 1.6 million tonnes higher on year, and is still going on," he said.

 

 

US bids may hold key to prices in next tender

 

The official said bids could be more competitive price-wise if US origin wheat is offered in the next tender.

 

Officials from India's Agriculture Ministry recently visited the US to discuss procedural issues for quality certification with their counterparts there.

 

The government official said suitable grades of US wheat will cost India around US$261/tonne including a freight cost 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 stringent.