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Pricey India wheat bids seen trimming purchases

Pricey India wheat bids seen trimming purchases
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First Published: Wed, Jul 04 2007. 05 18 PM IST
Updated: Wed, Jul 04 2007. 05 18 PM IST
Biman Mukherji and Mayank Bhardwaj/Reuters
New Delhi: India received seven bids for a one million tonne wheat import tender at prices between $320-$360 per tonne, levels at which traders said the government was unlikely to buy large quantities.
Trading firms including Cargill Inc. of the United States, the Netherlands’ Concordia Agritech and Glencore AG of Switzerland could muster only around 920,000 tonnes for sale, reflecting tight global supplies.
The bids are valid until July 10 and grain shipments must be made between August and November.
The lowest bidder, Toepfer International of Germany, offered 256,000 tonnes at $320 per tonne, traders said, nearly 40% above an average $230 paid for imports in 2006.
Toepfer’s offer is also way above prices of around $263 dismissed by the government as too high in a May tender.
“The government cannot afford to import at such high prices,” said Kishore Narne, vice-president of Anand Rathi Commodities.
“There will be a lot of resistance if India imports at prices higher than what it paid to buy local wheat from farmers.”
The government has so far bought around 11 million tonnes of new season wheat from domestic farmers at 8,500 rupees ($210) per tonne. It uses it to run welfare programmes and contain prices.
Last month, wheat on the Chicago Board of Trade rose to 11-year highs and traders expect little respite with world wheat stocks seen falling to a 30 year low due to erratic weather in the U.S. and drought in Russia and Ukraine.
No need to panic
“There is no panic at the moment as the government has purchased 11 million tonnes ... and it had 5 million tonnes stock on April 1 against a norm of 4 million tonnes,” Narne said. “The government may decide to postpone purchases.”
Rajni Panicker, an analyst with Man Financial, agreed, saying that while imports would be needed there was no need to rush in.
Last week, state-run MMTC Ltd. backed out of a tender to import 50,000 tonnes of wheat, citing high prices.
“We all were expecting this. After the government cancelled the previous tender, global prices went through the roof,” Narne said.
But one trader said India may chose to buy at least a small quantity of grain as scrapping two tenders in succession could mar its reputation as a buyer.
Farm Minister Sharad Pawar has said India would need to import 5 million tonnes of the grain between August and December, but traders expect imports of around 2 million because of the healthy purchases from local farmers.
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First Published: Wed, Jul 04 2007. 05 18 PM IST
More Topics: Wheat | Tender | Money Matters | Commodities |