Bangladesh buys 50,000 tonnes of wheat from Singapore’s Agrocorp at $448.38 per tonne

Bangladesh has accepted the offer of a single bidder for the tender opened on July 5 to import 50,000 tonnes of wheat after it has run out of options to get the cereal at a competitive rate, especially since India banned the grain’s shipments from May 13. 

“Bangladesh has confirmed the first wheat tender dated July 5 at $448.38 a tonne. It is a single offer made by Singapore’s Agrocorp International,” said Delhi-based exporter Rajesh Paharia Jain.

Main supplier

On July 14, Bangladesh called off its second tender in three weeks to import 50,000 tonnes of wheat as only a sole bid was made. Singapore’s Intra Business Pte Ltd had offered the grain at $476.38 a tonne. 

“Since May 14, after Indian banned wheat exports, Bangladesh has lost its main supplier. Till then, it was receiving wheat at a far more competitive price. The Indian ban is proving to be a major handicap for Dhaka,” said Jain. 

While scrapping the July 14 tender, Bangladesh kept alive the July 5 tender in which it was offered wheat of Australian, German, Bulgarian, Romanian or Canadian origin. “It has to look for other origins as it has few options,” he said. 

Prices rebound

Dhaka had opted for the July 5 offer as wheat prices in the global market have rebounded from a five-month low witnessed on July 15. Currently, benchmark wheat futures on the Chicago Board of Trade are quoted at $8.24 a bushel ($303.10 a tonne).

According to the International Grains Council, US Soft Red Winter wheat is currently offered at $339 a tonne, while Europe is offering French grade I at $359. US Hard Red Winter wheat is quoted at $384 and Argentine wheat at $423.

The problem for Bangladesh in getting wheat is that even among the consignments cleared by the Indian government, based on the letters of credit (LCs) opened before it banned exports, the volume it has got is low. 

Largest buyer in last fiscal

During the 2021-22 fiscal, Bangladesh accounted for 4.08 million tonnes (mt)—56 per cent—out of India’s total wheat exports of 7.23 mt. In April-May this fiscal, India exported 2.6 mt of wheat against 0.65 mt in the same period a year ago. Dhaka was again the highest buyer, importing 0.64 mt.

Bangladesh told the Indian government last month that it would need at least 6.2 mt of wheat this fiscal to meet its increasing demand. 

On June 22, Bangladesh scrapped another tender after Agrocorp International offered wheat at $548.38 a tonne. The Singapore-based firm was the lone bidder at that time.

Bangladesh has been floating wheat import tenders regularly to buy 1 mt totally to make up for the shortfall in supplies from Russia. Wheat exports from Russia and Ukraine, which make up 30 per cent of the global trade, have been affected due to the ongoing war between them. 

Russians export at hectic pace

Reports earlier this week said Russian wheat exports are twice the speed of shipments made last year. This could offer some hope to officials in Dhaka. 

The lowest bid for Bangladesh wheat tenders was offered in the one that opened on April 11. India’s Bagadia Brothers offered $399.69 a tonne. However, by the time Bangladesh floated its next tender on May 10 and opened it for scrutiny on May 23, wheat prices in the global market had surged as India banned the export of the cereal. 

India banned wheat exports as its crop this year was affected by a heatwave that swept across the country in March and April. Initially estimated at a record 111.34 mt, the crop was revised lower to 106.41 mt by the Ministry of Agriculture. The trader, however, pegs it even lower.

Meagre FCI procurement

A more than 50 per cent lower wheat procurement of 19 mt from farmers by the Food Corporation of India for its buffers stock against a record 43.33 mt last year was another factor. As Indian wheat was in demand in the global market, in view of supplies from Russia and Ukraine being affected, the Narendra Modi government banned its exports. 

 Surging inflation and rising wheat prices were other factors behind the Indian ban. Before the export ban, wheat prices ruled above ₹2,400 a quintal against the minimum support price (MSP) of ₹2,015 a quintal fixed for this year. Prices are still above the MSP, though they have come off the highs seen in the first half of May. Currently, the average weighted modal price (the rate at which most trades take place) is ₹2,115 a quintal. 

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