Likely to purchase another five lakh tonnes by year-end

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The scenario


1.5 lakh

tonnes of contracted consignments have already arrived.

Southern millers

have of 40,000 tonnes of wheat consignment each at $236-245 a tonne.

Flour mills

urge Centre to extend duty-free facility at least until February 27.

New Delhi, Sept 20

Private roller flour millers and traders have till date contracted around 5.5 lakh tonnes (lt) of imported wheat and are expected to contract another five lt before the yearend. That would take the country's aggregate wheat imports on both Government and private account during 2006-07 to roughly 66-67 lt, making it almost on par with Egypt's 70-72 lt.

Costs

Of the contracted 5.5 lt imports on private account, 1.5 lt has already arrived in the country, including 42,000 tonnes of Canadian origin delivered at Tuticorin (32,000 tonnes) and Chennai (10,000 tonnes). The rest is from Ukraine and Russia, which has landed through three vessels in Mumbai. These were contracted between $194 and $200 a tonne cost & freight.

Additionally, 1-1.5 lt wheat of Black Sea origin is estimated to be contracted, including some by State-owned companies such as PEC and MMTC Ltd on behalf of private millers, at $200-220 per tonne.

Demand for white

"Most of this wheat is red in colour, whereas we require white grain for the maida and bran. So most of the Russian, Ukraine and Canadian wheat is being used for mixing with regular white wheat," said Mr K.S. Kamala Kannan, CMD of Naga Ltd, a flour miller based in Dindigul, Tamil Nadu.

Currently there is more demand for Australian prime wheat, which meets millers' requirements better though at a higher cost. Southern mills have contracted three vessels of around 40,000 tonnes each at $236-245 a tonne for November-December.

Of these, two are expected to land in Mangalore and one at Kochi.

Besides, Australia's monopoly wheat shipper, AWB Ltd, has offered to supply 50,000 tonnes at Tuticorin and Chennai ports at $230-250 per tonne to millers by mid-November.

The letter of credit (LC) for this quantity has been opened by PEC, which would undertake the warehousing for AWB and also supply end-users.

AWB has also contracted to deliver two consignments of 50,000 tonnes each at Visakhapatnam and Tamil Nadu ports, for which prices have not been fixed yet.

"The problem with Australian wheat is that the country has gone through a bad drought, which has brought down its production from 25.1 million tonnes (mt) to 16.4 mt. So, they will obviously charge a premium. We may then have to look for other suppliers, such as Argentina, from where the crop would start arriving in end-October," a south-based miller said.

Stock limits

Meanwhile, the President of the Roller Flour Millers' Federation of India (RFMFI), Mr Prem Gupta, urged the Centre to extend the current duty-free wheat imports facility to the private trade from December 31 to "at least February 2007".

He also expressed concern over the recent decision empowering State governments to impose stock limits on wheat.

"Flour mills being actual user should be permitted to hold stocks to cater to their genuine raw material requirements. We must be allowed to stock 2-3 months of our milling capacity. A clarification on this issue is earnestly solicited," Mr Gupta said at the 66th Annual General Body Meeting of the RFMFI.

(This article was published in the Business Line print edition dated September 21, 2006)
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