The Hindu Business Line : Global bidders quote high rates as wheat flares up

New Delhi, Dec 17 The State Trading Corporation of India’s (STC) latest wheat import tender for 3.5 lakh tonnes (lt) has elicited offers totalling 3.30 lt from three bidders, who have quoted sky-high rates of $ 460 to $ 580 a tonne. This comes on a day when the bellwether March wheat futures at the Chicago Board of Trade (CBOT) breached the $10-a-bushel mark for the first ever time.

Those who bid at STC’s tender - floated on December 10 and which opened here on Monday - included the US-based Cargill Inc, Glencore International AG of Switzerland and Alfred C. Toepfer of Germany. Cargill is said to have been the lowest bidder, offering delivery of 65,000 tonnes at Mundra port for $ 459.90 a tonne, cost & freight (c&f).

In terms of quantity, Glencore offered to supply the maximum of two lt at Mundra and Kandla for $ 462 to $ 465 a tonne. The highest price range of $ 562 to $ 579.62 a tonne for 65,000 tonnes was quoted by Toepfer. These rates are way above the prices at which STC and the two other state-run trading firms, MMTC and PEC Ltd, have contracted wheat imports on behalf of the Centre through previous tenders.

During the current fiscal till now, about 18 lt of wheat imports have been finalised for augmenting public grain stocks. This includes 5.11 lt through STC’s tender of July 27 (at a weighted average price of $325.59 a tonne, c&f), 7.95 lt through its tender of August 30 (at $389.45 a tonne), 3.425 lt through MMTC Ltd’s tender of November 12 (at $400.19 a tonne), and 1.5 lt through PEC Ltd’s tender of November 26 (at $396.9 a tonne).

In 2006-07, 55 lt of wheat imports were altogether contracted at an average landed cost of $ 205.31 a tonne. The spiralling cost of imports is cause for concern for the Centre, which is seeking to bolster wheat inventories even as there is uncertainty over the domestic crop slated for harvest from next April. Bid quotes between the last two import tenders have spiralled by over $ 60 a tonne. The Centre has time till December 22 to decide whether to allow STC to purchase at the offered rates.

Global wheat prices have been on a boil since last year, triggered initially by an unprecedented drought in Australia and then dry weather in Ukraine and southern Russia. Ukraine has since banned shipments, while Russia has clamped a hefty tax on exports. There is also speculation over the new crop in the US being hit by poor rains in the southern plains.

The latest spurt in CBOT wheat prices to beyond $ 10 a bushel or almost $ 370 a tonne (one bushel=27.216 kg) has been prompted by reports of cold-weather damage to Argentina’s crop. Over the past one month alone, prices have risen by about $ 2.4 a bushel or $ 90 a tonne.