The Hindu Business Line : STC floats tender to buy 16.7 lakh tonnes wheat

The State Trading Corporation of India (STC) on Wednesday floated a fresh tender for import of 16.7 lakh tonnes of wheat on behalf of the Union Government. The latest tender, the fifth since February, would take the total quantum of wheat imports for the public distribution system to 55 lt.

Delivery schedule

Of the 16.7-lt tendered quantity, 8.45 lt is to arrive in the west coast ports of Kandla (3.5 lt), Mundra (2.7 lt), New Mangalore (1.2 lt) and Mumbai (1.05 lt). The balance 8.25 lt is to land in the east coast ports of Visakhapatnam (3.55 lt), Chennai (2.75 lt) and Tuticorin (1.95 lt).

The entire wheat is to be delivered between November and February 15, 2007.

The tender has specified that the deliveries at Mundra (2.7 lt) have to be made in Panamax size vessel with parcel sizes of 60,000 to 75,000 tonnes.

The parcel sizes have been set at 35,000 to 50,000 tonnes for Kandla , Visakhapatnam, Chennai, Tuticorin and New Mangalore, 25,000 to 35,000 tonnes at Mumbai. The last date for submission and opening of bids is September 5 and the offers made would be valid till September 13.

Till date, STC has floated four tenders, through which it has contracted aggregate imports of 38.3 lt. The imports are meant to beef up stocks at the Central pool, which, as on July 1, at 82.07 lt were way below the buffer norm of 170 lt for that date.

Bufferstocks

The Government's calculation is that the 55 lt of imported wheat would enable it to use up 10-11 lt every month and still start the next rabi marketing season from April with the normative minimum buffer of 40 lt.

Officials said the decision to float a single tender of 16.7 lt had been taken since the staggered tendering route had not yielded any particular advantage.

Rise in landed price

"The previous July 27 tender for four lt had resulted in only 3.3 lt being contracted. So, it does not make any real difference whether we come out with a series of tenders instead of finishing everything at one go," they claimed.

It is another matter though that between the first and last tender, the landed price of wheat contracted by STC has gone up by over $30 per tonne. The difference is all the more when one discounts for quality between Australian white wheat (in the first tender) and the less-preferred Russian/Black Sea-origin grain (in the last tender).

Besides the 55 lt of PDS wheat to be imported at nil duty, private flour mills and traders are reported to have signed contracts for around 5 lt at 5.2 per cent duty.

In addition, the State-owned MMTC and PEC Ltd have contracted 1.5 lt on behalf of private domestic customers.

Spot, futures rate

Wheat (dara) prices on Thursday were quoted at Rs 990-92 a quintal, down from the record Rs 1,000-1,005 on Saturday. Wheat for September delivery was quoted at Rs 963 a quintal against Rs 970 on NCDEX and on MCX, it ruled at Rs 987.90 against Rs 990.

In New York, the market opened higher on the news of STC tender.

Hard red wheat was quoted at $4.61 a bushel (Rs, 7,625 in f.o.b terms) a tonne for September delivery.

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