The Hindu Business Line : Poor response to FCI wheat tender

Mumbai April 30 The suspense over Food Corporation of India's (FCI) wheat purchase tender ended today with the response from participants extremely poor. There were reportedly only two respondents - one from Mumbai and one from New Delhi - of which one party responded without a bid bond.

The tender for 8 lakh tonnes spread over six months had many conditions that trading houses were uncomfortable with.

A senior executive of a trading company said it was unclear whether FCI wanted a total of 8 lakh tonnes spread over six months or 8 lakh tonnes every month for 6 months. In case of the latter, the aggregate requirement would have been 48 lakh tonnes.

Some were even wary of dealing with the government parastatal because of lack of clarity and uncertainty over the entire process.

FCI's flop show has sent negative signals to the global grains market, according to a multinational corporation executive.

Negative signals

Policymakers are in a fix over the failure of FCI tender. Wheat procurement too is running rather low. At the last count, it was 7.85 million tonnes (mt).

Now, there are serious reservations whether aggregate purchases would touch even last year's low level of 9.5 mt.

Whether FCI will rethink its import plans or amend terms and conditions is not known.

In addition to loss of credibility, the damp squib of a tender has already caused some loss in terms of firming ocean freight rates.

Freight rates soar

Shipping companies have jacked up freight rates to unprecedented levels in anticipation of Indian purchases and large shipments.

Panamax vessels are currently quoting in excess of $75 a tonne, while vessels with capacity of 30,000-40,000 tonnes quote $90 a tonne, an increase of over 10 per cent, pointed out a trader.

With the passage of every day, world wheat prices are expected to firm up further.

Meanwhile, Pakistan stands a very good chance of supplying wheat for arrival in May/June.

World wheat prices may spurt later today in the western markets on news of STC tender, it is widely expected.

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