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Wednesday, Jul 11, 2007

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Centre to pay $326 a tonne for 5.11 lt of imported wheat

Delivery at Mundra port between Aug and Nov

Harish Damodaran

New Delhi, July 10 The Centre will pay a whopping $325.59 a tonne for import of 5.11 lakh tonnes (lt) of wheat to bolster its grain inventories. This rate — the weighted average price, inclusive of cost and freight — is way above the $205.31 average at which the State Trading Corporation of India (STC) had contracted imports of 55 lt during 2006-07.

Out of the 5.11-lt, the major share of 2.56 lt has gone to Alfred C. Toepfer International of Germany, with the US commodity giant Cargill Inc and Riaz Trading of Russia bagging 1.30 lt and 1.25 lt, respectively. According to officials, Toepfer International would supply 1.28 lt at $317 a tonne and another 1.28 lt at $328 a tonne, while Cargill’s 1.30 lt is for a price range of $324-$327.1 per tonne and Riaz Trading’s 1.25 lt is at $329.95 per tonne.

“The entire 5.11 lt wheat is for delivery at Mundra port between August and November,” they added. The 5.11-lt contracted quantity is part of a tender floated by STC on June 26, against which it had received bids for 9.2 lt from seven global firms at between $317.95 and $370 a tonne. The lower quotes were for Mundra delivery, while the $370 per tonne price was for Tuticorin and Chennai ports.

The finally contracted average rate of $325.59 works out to a landed cost of about Rs 13,150 per tonne at current exchange rates. If one adds port handling and bagging charges of Rs 800-900 to this, the imported wheat leaving Mundra for the hinterland would cost around Rs 14,000 a tonne. Compare this to the Rs 10,000 a tonne at which wheat dara (loose) is now quoting at Delhi or the Rs 12,000-odd that southern mills are paying for domestic wheat delivered at their gates!

Interestingly, only on May 30, the Centre had scrapped an earlier 10-lt tender of STC. This was after the latter had negotiated supply of 3.06 lt at $263 a tonne.

“By first rejecting $263 as too high and now contracting at $325 plus, the Centre has willy-nilly injected bullishness into the domestic market. In the last one month alone, we have seen prices here go up by some Rs 750 a tonne. With each successive STC tender fetching higher rates than the preceding one, the market is establishing new benchmarks,” a Bangalore-based flour miller pointed out.

Related Stories:
STC floats tender to import 10 l tonnes wheat
Global wheat prices may come under pressure on STC move
Record global wheat prices raise worries
Bidders quote high for STC wheat tender

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