Cargill Inc., Glencore International AG and Toepfer International were among eight firms that offered to sell wheat to India at a tender on Wednesday as the nation expects to pay record prices to raise emergency stockpiles.
The state-owned State Trading Corp. (STC) got bids for 530,000 tonnes at $385 (Rs15,785) a tonne and $434 a tonne, said a government official who didn’t want to be identified as negotiations with suppliers are confidential. The company will award the contract by 3 September.
STC bought 511,000 tonnes from Cargill, Toepfer and Riaz Trading on 10 July for $317-330 a tonne. Wheat has since risen 22% on the Chicago Board of Trade, forcing the South Asian nation to pay record prices.
“India will have to be prepared to pay higher prices if they wish to source wheat from the global market,” said Akshita Bhatt, an analyst at Kotak Commodity Services Ltd in Mumbai. “Prices may rise further as demand is set to rise in the coming months.”
Wheat futures have almost doubled in the past year and reached a record $7.54 a bushel on 23 August.
India’s granaries held 12 million tonnes (mt) of wheat on 31 July, 30% less than targeted for 1 July.
The shortage comes at a time when global wheat prices are at their highest amid a drop in production in the world’s leading growers.
Imports may reach 5mt this year and the price is “not an issue,” agriculture minister Sharad Pawar said on 16 July. The government bought 11mt from farmers this year, he said last week. It needed to store 17.1mt by 1 July .
“The government may float tenders on a regular basis to get the best prices possible,” Bhatt said.
Cargill, the world’s biggest agricultural company, offered to sell 80,000 tonnes, Glencore 300,000 tonnes and Toepfer 70,000 tonnes at Wednesday’s tender, the official said.
India’s state-run trader PEC Ltd offered 50,000 tonnes, Switzerland’s Ameropa Holding AG 25,000 tonnes and Starcom 5,000 tonnes. Two bids were rejected by the government, the official said.
The government sought to buy an unspecified amount of the grain for delivery between October and December. State Trading Corp. will decide how much to import by 3 September. Bloomberg