March 7, 2012
In order to control increase in local prices, Bangladesh is seeking 100,000 tonnes of Ukraine wheat for immediate shipment via an inter-government deal, a senior Dhaka-based food ministry official said Tuesday (Mar 6).
Although inventories are higher on year and the local harvest is due next month, "we have asked for wheat from Ukraine on an urgent basis because private-sector imports have slowed down and prices have increased sharply," the official told Dow Jones Newswires.
Wheat flour prices in Bangladesh have increased 20% in the past three months to BDT30 (US$0.37) a kilogramme, making wheat flour costlier than rice, a reversal of the usual relationship. Rice prices have declined 15% to BDT22 (US$0.27) per kilogramme.
Bangladesh has purchased 160,000 tonnes of wheat from Ukraine in two inter-government deals since September, 112,000 tonnes of which has been delivered.
Bangladesh is one of the world's largest importers of wheat, buying between 3-3.5 million tonnes annually, of which close to 800,000 tonnes is brought in by the government.
"We are yet to get a response from Ukraine's government but Bangladesh wants to make purchases around the price at which it is offered wheat in global tenders," said the official.
Bangladesh has resumed wheat import tenders after a gap of more than a month and made the latest purchase of 50,000 tonnes at US$306.95/tonne, cost, insurance and freight, up 6.3% from an early January purchase.
Ukraine sold wheat to Bangladesh in September at US$320/tonne and in December at US$280/tonne, CIF. Ukraine government officials couldn't be reached for comment.
Private Bangladeshi companies suffered heavy losses last year when local prices fell below the cost of imports after large scale purchases from Pakistan. Private imports are slow as banks are reluctant to open lines of credit due to low foreign exchange reserves, the official said.
Consequently wheat prices are rising even though the government's reserves, at 261,000 tonnes, are up more than six fold compared with a year ago.
Bangladesh has purchased 670,000 tonnes wheat for the state reserves in the fiscal year that began July 1 through tenders and in deals with Ukraine, of which around 248,000 tonnes are yet to be delivered.