Bangladesh tender. Indian firm lowest bidder in Bangladesh wheat import tender

India’s Bagadia Brothers Private Limited has come up with the lowest bid in Bangladesh’s latest global commercial tender to import 50,000 tonnes of wheat.

Delhi-based exporter Rajesh Paharia Jain told BusinessLine that Bangladesh has received two bids for the latest tender against a sole bid received in the earlier tender. The bids were opened yesterday (Sunday). 

“Bagadia has quoted $464.55 a tonne to deliver 50,000 tonnes of wheat in the Package 12 tender. Only two firms took part in this with Singapore-based Agrocorp International, which offered the grain at $465.38, being the other,” he said.

In the previous tender for which bids were opened on May 24, Agrocorp International was the lone bidder for the 50,000 tonnes tender offering wheat of any origin at $548.38 a tonne. 

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Pakistan tender

The bids are nearly $50 a tonne lower than the offerings made for a Pakistan tender to import 5,00,000 tonnes of wheat. The neighbouring country has picked up four sellers and will buy wheat at $515.49 a tonne.

In Pakistan’s tender, the lowest bid of $515.49 a tonne was made by Canada’s Falconbridge but it offered only 1,10,000 tonnes. Other bids ranged from $520 to $537 and Islamabad has been able to convince four others bidders to offer at Falconbridge’s price.

Supply sources unclear

All tenders were bid at cost, insurance, and freight, while Bangladesh’s tender also includes unloading charges. It is not yet clear if Bagadia Brothers will source all the wheat from India or partly. The problem is India has banned wheat exports from May 13 and will allow only those consignments for which irrevocable letters of credit (LCs) have been opened. 

India banned wheat exports to address issues such as lower-than-expected production — which was affected by a heatwave that swept across the nation in March-April. Rising inflation and low procurement by the Food Corporation of India in view of open market prices ruling higher than the minimum support price (MSP) of ₹2,015 a quintal following demand for exports also forced New Delhi to act.

Australian option

In the case of Bangladesh, its government will have to first accept the lowest bid in the tender opened today and then sign the contract which will take a fortnight.

A trade analyst said there are chances for India to allow wheat exports to Bangladesh even if traders get orders to ship to Dhaka. “It might treat private traders’ shipments to governments as a government-to-government deal but we need to see how the policy evolves,” the analyst said. 

The Directorate-General of Foreign Trade order banning wheat said the bar was also to ensure supplies to neighbouring and vulnerable countries. The Narendra Modi government has said it will consider government-to-government exports.

“Australia is the only other option but one wonders if it has wheat to export now. Probably, Bagadia could have been misled that the international commercial tender could be treated as a government-to-government one and hence it has bid the lowest,” Jain said. 

Wheat rebounds on CBOT  

Of the 1-1.2 million tonnes (mt) of wheat released for having LCs, at least 0.6 mt are meant for Bangladesh. “Futures government-to-government deals for Bangladesh could be tough in view of this,” the exporter said. Bagadia Brothers had also won a tender that was floated on April 11, quoting the lowest offer price of  $399.69 a tonne. 

Jain wondered if the two bidders could supply at the quoted price. This is on the heels of the benchmark wheat contracts on the Chicago Board of Trade (CBOT) rebounding on Friday from a two-week low to $11.575 a bushel ($425.30 a tonne) as rains in North America affected the sowing of spring wheat.

Domestic prices above MSP

According to the International Grains Council, the competitive offer for wheat currently is from the European Union at $449 a tonne free-on-board, while Argentine is offering its produce at $475. The US is offering Soft Red Winter wheat at $455 and Hard Red Winter wheat at $523.

In India, the average weighted price of wheat at various agricultural produce marketing committee yards is currently around ₹2,065 a tonne. Bangladesh has decided to import one mt of wheat this year through tenders after supplies from Russia were affected. 

Supplies from Russia and Ukraine, which make up nearly 30 per cent of the global market supply, have been affected following the conflict between both the erstwhile Soviet members. Jain said Russia has now begun to export wheat, which could top 35 mt with countries such as Egypt, Turkey, Pakistan, Iran, Algeria, Syria, Mauritius, and Bangladesh like to benefit. 

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