India on Tuesday issued a tender for the import of 1 million tonnes of wheat less than a month after cancelling an earlier offer due to firm prices. Prices have now soared to 11-year highs and traders said the State Trading Corp.
might again drop the tender as it would have to pay above $300 per tonne for the grain, way above prices it dismissed as too expensive last month. In May India cancelled a tender to import an identical amount of wheat after receiving bids of around $263 per tonne.
"I don't think they will buy as the market is very bullish internationally with the prices above $300 a tonne," said Vinod Kapoor, an official of the Roller Flour Millers Association of India.
A food ministry source said earlier the grain would be shipped to the southern ports of Chennai, Vizag, Tuticorin, and Kakinada, and the western ports of Kandla and Mundra. He said bids would open on July 4 and would be valid until July 10. Shipments would be made between August and November. The ministry source said the government had decided to change some of the import norms, like bid bonds, bank guarantees and demurrage.
But an STC official told Reuters the quality specifications would be exactly the same as in previous tenders. The US wheat industry was not able to participate in tenders for a total of 5.5 million tonnes floated by India last year because of stringent plant safety issues.
In May, a team from New Delhi met US Agriculture Department officials in Washington to discuss a host of plant safety issues that have stymied US wheat sales. The talks included an agreement on how to certify that US wheat shipments met Indian quarantine requirements and also made progress on how to make US procedures for sampling and measuring shipments for weed seeds fit India's requirements. India requires a lower level of weed seeds than typically requested in international tenders.
A number of trading firms which have bid in previous tenders have termed India's import norms "rigid". "It will not be easy for India this time as the international market is too tight," said Rajni Panicker, an analyst with Man Financial. "Wheat futures at the Chicago Board of Trade are at around $6 per bushel, up about 30 percent against three to four weeks (ago)."
Earlier this month, Farm Minister Sharad Pawar said India would need to import 5 million tonnes of wheat between August and December to ensure supplies for the next crop year beginning April 2008. "It will be too early to say at what price India will get 1 million tonnes of wheat," said Atul Chaturvedi, president of Adani Exports Ltd.
Chaturvedi said a lot would depend on the size of Australia's wheat crop, which would be harvested between October and December. "The price of wheat will definitely go above $300 per tonne now. I really don't know how much India will buy at this price," said a Mumbai-based trader with an international commodities firm.
Kapoor said government agencies had procured close to 12 million tonnes of wheat from farmers and were not in any immediate need. "They have issued this tender only to give a message to the industry that if the domestic prices become bullish, we can go for it," said Kapoor.
He said wheat prices at Delhi had firmed up slightly to 9,650 ($235) rupees per tonne against 9,400 rupees at the end of May and the government would not like them to go up much further.