August 23, 2007

India wheat tender may get bids at US$380-405/tonne
 

India's coming tender to import wheat may result in costly bids between US$380-405/tonne for bulk cargoes, a trade executive said Wednesday (Aug 22).

"Only limited volumes of Australian wheat can be offered in containers at around US$335/tonne for supply from January onwards, but such container cargoes may not be viable from Russia," said a Mumbai-based official of an international trading company.

He said global prices are high and Russian wheat is being offered at about US$300/tonne, free-on-board.

The official said viability of container-based cargoes depends on origin and destination, and in India's case, they are most suited for purchases from Australia but may not work for wheat imports from Russia.

He said global demand for containers is very strong and they are most suited for purchases by those looking to buy small volumes of about 10,000 to 20,000 tonnes.

He said it may cost about US$405/tonne for Russian wheat to be delivered in containers at Indian ports, while bulk shipment in Panamax vessels in the western port of Mundra would cost US$380/tonne.

Another trader said even if India buys 100,000 tonnes of wheat, it would require some 5,000 containers to make the delivery.

However, containers have lower turnaround times and demurrage is minimal compared with bulk shipments, he noted.

Traders said there is a hefty risk premium in tenders issued by State Trading Corp., of about US$20/tonne, due to stringent quality and high demurrage, including the time taken by Plant Health Officers to inspect the cargo and grab and crane charges for unloading wheat.