May 30, 2006

India seeks more time to keep options open in wheat deal

India's State Trading Corp may ask Agrico and Australia's AWB Ltd, whose bids were accepted for the supply of wheat, to extend the validity period on their offers by one or two days, a government official said Monday (May 29).

India last week accepted the two bids to supply a total 1.7 million tonnes of wheat, but rejected six other bids in the three million tonne import tender.

The bids were opened last week and are valid until Tuesday (May 30).

Traders said STC may be hoping to buy larger quantities from the two firms and also find more leeway to negotiate prices.

Minister of State Akhilesh Prasad Singh said last week that the bids of AWB for supply of 1.2 million tonnes and Agrico Trade and Finance for 500,000 tonnes were found to be technically qualified.

AWB has offered to supply 60,000 tonnes of wheat at the western port of Mundra, at US$187 a tonne including cost and freight. The remaining amount would be supplied at other Indian ports at between US$208-210 per tonne cost and freight.

Agrico offered wheat of Russian origin at around US$198 a tonne cost and freight, traders said.

Traders said STC was negotiating with AWB to bring down its offer price in line with that of Agrico but the Australian firm was unlikely to do so. AWB might end up supplying only about 500,000 tonnes of wheat against the 1.2 million tonnes it had bid.

Last week the minister said the government might consider floating an additional tender if it does not get the required volumes from the present tender.