The Hindu Business Line : Wheat import tender scrapped

New Delhi May 30 In a bold move, the Centre has decided not purchase a single tonne of wheat against the 10 lakh tonnes (lt) import tender floated on its behalf by the State Trading Corporation of India (STC).

Seven bids

The tender, issued on April 30 and opened on May 21, attracted seven bidders who quoted prices between $265.5 and $302 a tonne c&f. The bidders included Glencore Interntional AG of Switzerland, Alfred C. Toepfer International of Germany, the US commodity giant Cargill, Adani Global of Singapore, Adani India (on behalf of Archer Daniels Midlands of the US) and Concordia Agritrading of Singapore.

Following a scrutiny of the bids, STC had negotiated a rate of $263 per tonne for 3.06 lt out of the total 10 lt tendered quantity. This comprised 1.8 lt from Glencore and 1.26 lt from Alfred C. Toepfer to be delivered in Panamax vessels at Mundra port by August 15.

"The proposal was sent by STC to the Food Ministry, which has now been rejected," officials said.

According to them, the $263 price arrived after negotiations was still far too high, compared to the weighted average of $205.31 a tonne at which STC had contracted 55 lt of wheat last year. "It makes more sense to float a fresh tender after July, when the European crop enters the market. By then, the size of the Australian crop (which seems better than last year) would be known. Moreover, we hope to sort out some of the quarantine procedural issues pertaining to US wheat, which will further widen our supplier base," they said.

In 2006, "we were moving from an easy to tight market, with every successive STC tender eliciting higher quotes than the previous one". But this time, "we are heading from a tight to more competitive situation and future tenders will definitely attract lower bids," the officials claimed.

What seems to have prompted the latest decision is the improved availability.

The 2007-08 marketing season (April-June) opened with stocks of 45.63 lt in the Central pool, against 20.09 lt in 2006-07. Further, Government agencies have procured 104.23 lt during the till Tuesday.

"Earlier, there were doubts if procurement would touch 100 lt. But now, we might even do 115-120 lt. Together with the opening stocks of 45 lt, gives us 160 lt of wheat.

Taking an average monthly offtake of 10 lt, we would still have opening stocks of 40 lt in 2008-09, which meets the minimum buffer norm," the officials pointed out.

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