The Hindu Business Line : PEC to buy 1.5 lt wheat from JK Intl at $396.9/t

Public sector PEC Ltd, on Friday, finalised purchase of 1.5 lakh tonnes (lt) of wheat from JK International Pty Ltd of Australia in its tender for import of up to 3.5 lt on behalf of the Centre. The 1.5 lt quantity has been contracted at a weighted average price of $396.9 a tonne.

Bidders

The Brisbane-headquartered commodity trader was one of the six firms to have bid for PEC’s tender, which was floated on November 26 and opened on December 3. Other bidders included the US-based Cargill, Glencore International AG of Switzerland, Alfred C. Toepfer of Germany, Concordia Agritrading (a subsidiary of the Dutch trading house, Nidera) and Starcom Resources of Singapore.

While the bidders offered to supply an aggregate quantity of 6.30 lt, against the tendered 3.5 lt, the Centre has so far decided to finalise only purchase of 1.5 lt wholly through JK International. Since the present price bids are valid till Saturday, there is a possibility still of contracting additional quantities, official sources said.

Lowest quote

JK International had offered the lowest quote of $395.88 a tonne (cost & freight) for 65,000 tonnes at Mundra port, besides $398.97 a tonne for 45,000 tonnes at Kandla, $401.94 a tonne for 35,000 tonnes at Mumbai and $418.95 a tonne for 40,000 tonnes at Tuticorin. It appears that the Centre has basically accepted the company’s offers for Mundra, Kandla and Mumbai delivery.

There have been doubts over JK International being in a position to deliver the wheat, given that AWB Ltd (the erstwhile Australian Wheat Board) enjoys a monopoly wheat shipper status in Australia and others cannot technically export except through grant of a special licence. But since JK International in this case would be procuring the wheat mainly from Argentina, Canada or Russia, there would be no such problem, the sources claimed.

Other tenders

PEC’s latest tender is the fourth one to be floated by a state-run company on behalf of the Centre during 2007-08. The two tenders by STC, issued on July 27 and August 30, resulted in imports of 5.11 lt and 7.95 lt being contracted at weighted average prices of $325.59 and 389.45 a tonne.

In MMTC’s tender of November 12, 3.425 lt of imports were finalised for $400.19 a tonne. During 2006-07, imports of 55 lt (entirely through STC) were contracted for the Central pool at an average of $205.31 a tonne.

STC is scheduled to float a fresh tender on December 10. According to agency reports, it might seek bids for over five lt, as against the earlier planned 3.3 lt. The Centre has targeted import of 23 lt during the current fiscal, of which it has so far contracted about 18 lt. STC may be asked to buy more mainly to meet the shortfall from PEC’s latest tender.