The Hindu Business Line : Pvt trade wheat import shipment set to arrive

Firm scenario
A Pune-based firm has contracted Canadian wheat at $195/tonne.
Ukraine wheat is being quoted at $190 a tonne c&f.
Domestic prices have increased by Rs 20 since STC floated a tender to import 4 lakh tonnes.

Chennai , Aug 2

The first consignment of 45,000 tonnes wheat being imported by the private trade is expected to arrive in the country during the weekend or early next week.

According to trade sources, the Canadian origin wheat has been contracted by a Pune-based firm on behalf of a few millers in the country. The wheat has been bought at $195 (Rs 9,100) a tonne c&f.

Unloading at 3 ports

The vessel carrying the wheat will first dock at Mumbai to unload a part of the consignment before unloading the rest at Chennai and Tuticorin ports. In Chennai, the vessel is likely to unload 6,000 tonnes.

This is the only private deal that has been struck so far. Though talks are on to contract Ukraine wheat, nothing has firmed up yet.

"Wheat prices are rising globally. Ukraine wheat, which is sold at discount to Indian wheat, is quoting at $190 a tonne c&f. For us, it is not viable," a miller in South India said.

Current costs

Currently, domestic wheat costs Rs 10,800-10,850 to be delivered at the mills. The imported wheat at the mill gates is likely to cost around Rs 11,000 a tonne after the payment of 5.2 per cent Customs duty, transportation from the port and clearing and packing charges. Wheat for mill delivery in the North is quoting at Rs 890 a tonne.

"The problem we are facing currently is supply. While global prices are rising, supplies are dwindling in the domestic market," a North India-based miller said.

Wheat prices have begun to firm up again since last week, especially after the State Trading Corporation floated a tender to import another four lakh tonnes (lt) of wheat on behalf of the Centre. The wheat will be utilised to strengthen the buffer stocks. So far, STC has contracted 39 lt of wheat for import on behalf of the Centre. Imports on behalf of the Centre are duty-free.

On Wednesday, wheat dara prices were quoted at Rs 8,685 a tonne, up from Rs 8,590 on July 24 when STC floated the tender to import four lt wheat. In New Delhi, prices have increased to Rs 8,950-8,970 a quintal from Rs 8,825 during the same period.

Another STC Tender?

"We are told that STC is likely to float another tender for 15 lakh tonnes," said an official of a flour mill based in Tamil Nadu.

"Prices have increased by Rs 20 a quintal since the STC floated the tender last week," the North Indian miller said.

"The problem is that we feel the Union Agriculture Ministry has failed to correctly assess wheat production. It has gone by the area sown in each State rather than looking into yield," said Mr M.V. Balasubramaniam of Narasu's Roller Flour Mills, Salem.

"Flour mills are in trouble since our customers are not allowing to hike the product prices. Our margins are squeezed, whereas our capital requirement has increased 30 per cent this year," he said.

Problems

Flour mills also perceive problems with imported wheat. "We will be getting red wheat from countries such as Canada and US. As a result, wheat bran and flour will be a little reddish. There could be some consumer resistance to it," Mr Balasubramaniam said.

"We could face some problem in making vermicelli," said Mr Pramod Kumar, Executive Director of Belgaum Roller Flour Mills.

Australian wheat is supposed to be the most suitable replacement for Indian wheat. However, a couple of mills are likely to test Ukraine wheat, according to trade sources.

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