The Hindu Business Line : STC gets nod to import wheat at $389.45/tonne

New Delhi, Sept. 3 The Centre has given the State Trading Corporation of India (STC) the go-ahead to import 7.95 lakh tonnes (lt) of wheat at an average price of $389.45 a tonne, cost and freight.

This is more than twice the weighted average of $178.75 a tonne at which STC had contracted 5 lt in its first ever tender floated on February 10 last year.

EGoM move

The decision to allow STC to import 7.95 lt — more than the 5.30 lt for which bids were received in its latest tender issued on August 23 — was taken by the Empowered Group of Ministers under the External Affairs Minister, Mr Pranab Mukherjee, here on Monday.

While the Union Food and Agriculture Minister, Mr Sharad Pawar, could not attend the meeting as he was away in London, he is said to have concurred with the move.

Glencore gets the cake

Of the total 7.95 lt, the bulk of 7.4 lt has been awarded to Glencore International AG. The Swiss commodity giant will be supplying 5.2 lt at Mundra port in Gujarat for $385 a tonne in October, $387 a tonne in November and $390 a tonne in December. Besides, it would be delivering 2.2 lt in Kandla for $388 a tonne in October and $391 a tonne in November.

Apart from Glencore, Alfred C. Toepfer of Germany would be supplying 50,000 tonnes at Chennai for $397 a tonne and Starcom Resources of Singapore the balance 5,000 tonnes in containers.

PEC offer rejected

“The offer from the public sector PEC Ltd, at $394 a tonne for Mundra delivery, could not be considered because it was higher than that of Glencore. Also, there was a view that as a PSU, it can only contract on behalf of the Government and not supply to another PSU,” Food Ministry officials said.

Tough call

The decision to contract imports at $389.45 a tonne is likely to invite controversy, as it translates into a landed price of almost Rs 16 a kg, excluding costs incurred at the port and transport to public godowns.

This is way above the Rs 10.20-10.25 at which wheat dara is currently trading in Delhi and the Rs 11.95-12.10 a kg at which flour mills in the South are sourcing the grain at their godowns.

“It was a tough call to make. But there was no option because the way global prices have been behaving of late, there is no guarantee that we may have to shell out even more in later tenders,” the officials added.

December wheat futures at the Chicago Board of Trade have crossed all-time highs of $8 a bushel or $294 a tonne, while Paris November milling wheat at the Euronext.liffe exchange has hit a new peak of €265.5 or $363 per tonne.