Bangladesh calls off its second wheat tender in 3 weeks

Bangladesh has called off its second wheat import tender in three weeks to purchase 50,000 tonnes as its latest one attracted only a single bidder.

In the latest tender, Intra Business Pte Ltd, Singapore, offered wheat of any origin such as Australia, Germany, Bulgaria, Romania or Canada at $476.38 a tonne, said Delhi-based exporter Rajesh Paharia Jain. 

Earlier tenders

Bid offers made in earlier tenders that ended on July 5, are alive and not cancelled. In the tender that ended on July 5, Bangladesh was offered 50,000 tonnes of wheat by Agrocorp International at $448.38 a tonne. 

However, this is the second tender to be called off in three weeks after another tender that closed on June 22 was cancelled. Dhaka had earlier rejected a sole bid received for a tender that ended on May 23. In that tender, Agrocorp International had offered the grain at $548.38 a tonne. 

The tenders have been floated by the Bangladesh government as part of its move to import one million tonnes (mt) of wheat this year to make up for the shortfall in supplies from Russia. 

Dhaka’s requirement

Last month, Dhaka told New Delhi that its dependence on Indian wheat has increased, and it would need at least 6.2 mt of wheat this fiscal to meet its increasing demand.

Bangladesh had received the lowest bid for wheat imports in the tender that was scrutinised on April 11. India’s Bagadia Brothers offered $399.69 a tonne in that tender. 

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. 

Reason for Indian ban

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.

New Delhi was also affected by Food Corporation of India procuring only 19 mt of wheat from farmers for its buffers stocks against a record 43.33 mt last year. With Indian wheat in demand in the global market, andsupplies from Russia and Ukraine were affected by the war, the Narendra Modi government banned wheat exports on May 13. Russia and Ukraine, which are in an armed battle since February 24, make up 30 per cent of the global wheat trade. 

Other factors

Surging inflation and rising wheat prices were other factors behind the Indian ban. Until then, 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 ₹2,077 a quintal. 

In the global market, benchmark wheat futures on the Chicago Board of Trade are currently ruling at $8.02, a bushel down sharply from $12.77 on May 17 soon after India’s export ban. 

According to the International Grains Council, wheat is currently offered for exports at $359 by Europe, while the US is offering its Soft Red Winter wheat at $330 a tonne. The US’s wheat is quoted at $379 and Argentine wheat at $430.

Global wheat supplies have improved, with the grain from Ukraine being shipped by train and road to ports in other countries. The UN, besides NATO and its allies have also said wheat would not be covered under the sanctions imposed on Moscow for its aggression against Kyiv.

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