Government's new series of tenders for wheat exports may evoke poor response .

NEW DELHI: The government's new series of tenders for wheat exports opening from Wednesday may evoke a tepid response from private traders amid weak global demand. Akin to major wheat suppliers, India is sitting on huge stockpiles of wheat and trading companies expect prices to soften to $270-280 a tonne free on board (FOB).

But extreme cold conditions in the United States are said to be damaging the wheat crop. On Tuesday morning, Chicago Board of Trade ( CBOT) March wheat climbed 0.3% to $6.07 a bushel. This could reflect in an uptick in global prices in the coming weeks. "In the next level of tenders, we see prices at $270 FOB India on west coast and on East coast at $269 a tonne," said BK Anand, head, grain supply chain, Cargill India. He added that the shipment was for February and he has not been seeing much demand.

In a tender that closed on November 15, the highest bid for wheat export was at $289.90 a tonne.

"Bids were higher in the previous tenders as most of the traders needed to cover their positions for making the delivery," said Shivaz Monga, director, Emmsons International. He said quotes were dropping to the $275-285 range with a new crop from Gujarat expected by March.

Of the 20 lakh tonne allocated in August for exports, state trading agencies have already tendered 15 lakh tonne. Against the contracted quantity of 6.92 lakh tonne wheat, over 2.21 lakh tonne has been exported, said a government official. The government targets to export further 9 lakh tonne wheat with tenders floated from various ports before the closure of this financial year.

If there is a good response, the Centre might look at allocating more grains for exports, said government and industry sources. The country exported 42 lakh tonne wheat in the previous year, which fetched $1.4 billion in the international market.

Indian wheat was in demand in Bangladesh, Ethiopia, Sri Lanka and West Asia. "We are expecting a good response for the tenders to opened on January 8, 10, 14 and 23," said a Food Corporation of India (FCI) official. Multinational players such as Glencore, Cargill, Singaporebased trading companies Concordia and Midstar to Indian player Emmsons have been actively participating in the tenders floated by the government agencies.

As on December 16, total stock of wheat in the central pool was 299.39 lakh tonne with FCI holding 120.34 lakh tonne. As on January 1, the country should have 82 lakh tonne wheat in buffer and additional 30 lakh tonne in strategic reserves.

Sale in open market is gradually picking up. Of the 100 lakh tonne wheat and rice allocated for sale, private traders have purchased 30 lakh tonne.

"Since July, sales have picked up. Out of the 98.87 lakh tonne wheat allocated, we have sold 28.78 lakh tonne," said a government official.

Source : economictimes.indiatimes.com