India seeks to buy up to 300,000 tonnes of wheat
India may buy up to 300,000 tonnes of wheat, out of 530,000 tonnes offered by international traders in a tender this week, as New Delhi struggles to replenish stocks at a time when world supplies are tight.
Global firms, including Cargill Inc, Glencore International and Concordia Agritech have offered 530,000 tonnes of wheat at a price range of $385-$434 a tonne.
"They will clear about 300,000 tonnes or so depending on prices, maybe up to $400 per tonne," said Avinash Raheja, a grains analyst with Commtrendz Risk Management.
Other industry officials agreed.
"The government might buy up to 300,000 tonnes and reject high-end offers as they need to build stocks," said Vinod Kapoor, a member of the Roller Flour Millers Federation of India.
The government in May cancelled a tender to import 1 million tonnes of wheat after receiving bids of around $263 per tonne, which it termed "very high". But in July decided to import 511,000 tonnes of wheat at an average price of $325 per tonne.
Shipments against the latest tender -- which closes on Wednesday -- could either be in bulk or in containers for delivery between October and December.
Traders said the government might pick up wheat offered for delivery after November in the southern ports.
"I expect another tender in the second half of September as the government spaces out its purchases," said Raheja.
Soft red winter wheat futures on the Chicago Board of Trade roared to all-time highs on Thursday on strong technical momentum and unrelenting export demand amid thin global wheat supplies.
The bellwether December wheat contract on the Chicago Board of Trade rose the daily maximum of 30 cents per bushel to $7.88-1/2, the record high price for any CBOT wheat contract, before closing at $7.84-1/2, up 26 cents or 3.4 percent.
India, in a bid to avoid fuelling prices as in the past, floated a tender this month to import an unspecified quantity of wheat on government account.
In the last six wheat import tenders since February 2006, the State Trading Corp, which buys the grain on behalf of the government, had specified the quantities it planned to purchase.
And each tender flared global prices.
Farm Minister Sharad Pawar said this week wheat purchases would be a regular feature this year as he wanted to build large stocks ahead of the next harvest in April.
"Let us take baby steps, but more frequently, as it will have less impact on the market and prices," Raheja said, explaining the government's rationale of not specifying the quantity.
Wheat output in India is expected to rise to 74.89 million tonnes in 2007, from 69.48 million tonnes last year.
Traders said the landed cost of wheat, if contracted around $400 per tonne, would be 30 percent higher than domestic prices in southern India and this could lift the local market further.
"If they buy huge quantities, it will fuel the domestic market. And if they reject it outright, there may not be much on offer the next time," said KN Rahman, analyst with IL&FS Investment Mart.