June 1, 2012


Bangladesh rejects Ukraine's wheat offer prices



Dhaka-based government officials said Thursday (May 31) that Ukraine's wheat offer prices for a proposed inter-government deal have been rejected by Bangladesh, terming them too high and most shipments from an earlier deal have also been delayed due to logistical problems.


Bangladesh is one of the world's largest importers of wheat, buying between three million and 3.5 million tonnes annually, of which close to 800,000 tonnes is brought in by the government. The deal with Ukraine was aimed at keeping a check at inflation as local prices are firm despite last month's harvest.


Due to delay in deliveries and failure to clinch a fresh deal with Ukraine, Bangladesh has resumed issuing public tenders seeking wheat, after a gap of two-and-a-half months.


The proposed deal with Ukraine fell through as the offer prices were well above what Bangladesh paid private companies in recent tenders, a senior food ministry official said.


He said Ukraine offered 200,000 tonnes of wheat with 10%, 11% and 12% protein around US$305/tonne, US$310/tonne and US$315/tonne, cost, insurance and freight, liner out. In liner-out deals, demurrage costs are borne by the seller.


In three tenders since March, Bangladesh has bought 150,000 tonnes from India's LMJ International at US$303.90/tonne, US$299.50/tonne and US$288.30/tonne, CIF, liner-out. Government officials in Ukraine couldn't be immediately reached for comment, but traders in Odessa said it isn't possible for milling wheat to be exported at such low rates due to tight supply and weather-induced damage to the local crop.


Bangladesh has purchased 160,000 tonnes of wheat from Ukraine's state-run Khlib Investbud in two inter-government deals since September, but 79% volume of the second deal of 60,000 tonnes that was contracted at US$280/tonne, CIF, has yet to be delivered.


The deadline for delivery expired earlier this month but few cargoes have arrived since early March, another official in Dhaka said.


He said Ukraine hasn't refused to implement the deal but initially suggested that Bangladesh should also buy more wheat--as indicated in a pact inked earlier this year--at the latest offer prices if cheaper previous purchases to be delivered. Later, it expressed interest in delivering wheat of other origins but Bangladesh declined, the official said.


London-based International Grains Council said last week that Ukraine's wheat output will likely shrink--due to dry weather--by nearly a third to 14 million tonnes in the marketing year from July 1, dragging down exports by 19% to four million tonnes.