Indian and multinational trading firms sourcing agricultural produce from here are enjoying an edge in the latest tender floated by Bangladesh to import 50,000 tonnes of wheat on March 30. This is the fourth tender floated by Dhaka for wheat imports.
The earlier ones too were for buying 50,000 tonnes each. “Bangladesh plans to import at least one million tonnes (mt) of wheat over the next few months and will float tenders regularly,” said Delhi-based exporter Rajesh Paharia Jain.
Why Indian cereal
Until now, Bangladesh had been buying Russian wheat. But with its conflict with Ukraine disrupting supplies, Dhaka is looking to New Delhi. “The regional relations are good between both countries. India has ample stock to help Bangladesh meet the disruption in Russian supplies,” said trade analyst S Chandrasekaran.
India needs to have 4.46 mt of operational stock and 3 mt of strategic reserves of wheat as of April 1 every year. Against this, the Food Corporation of India had 23.4 mt of wheat as of March 1. It is likely to be around 20 mt as of April 1.
“There are two reasons why Bangladesh has begun to accept India-origin wheat. Earlier, it had been buying wheat from the Black Sea region. One, wheat prices are currently ruling higher in the global market. Two, India has begun cleaning and grading its wheat,” said Jain.
Prices up 57% y-o-y
According to International Grains Council data, the wheat sub-index is 57 per cent higher year-on-year. While wheat from Argentina is quoted at $396 a tonne free-on-board (f.o.b), US Hard Red Winter wheat is ruling at $457 and Soft Red Winter wheat at $424. Europe France grade wheat is offered at $412.
On the Chicago Board of Trade, benchmark wheat futures ended at $10.22 a bushel ($402 a tonne). The high prices have helped India garner good orders for wheat abroad with over 1 mt deal being signed in the first two weeks of Russian troops entering Ukraine on February 24.
In the local agricultural produce marketing committee mandis, wheat prices are ruling at over ₹2,200 a quintal against the minimum support price of ₹2,015 even as arrivals of the new crop have begun.
The government told the Lok Sabha on Wednesday that over 7 mt of wheat — a record — had been exported till March 22 in the current fiscal. During the April-January period of the current fiscal, Bangladesh bought 3.48 mt of wheat compared with 1.15 mt the whole of last fiscal.
Bids in third tender
In its tender that ends on April 11, Bangladesh said 60 per cent of the consignment should be delivered at Chattogram port and the rest at Mongla port. Dhaka had floated three tenders earlier.
The third tender saw the lowest bid at $409.97 a tonne cost, insurance and freight plus unloading costs by trading house Swiss Singapore Overseas. The next best bids were $424.77 and $442.38. According to Jain, most of these shipments are going from Kandla port in Gujarat.
In the second tender, Bangladesh, which requires the consignments 40 days after the contract is signed, got the best sale bid at $390.92 a tonne but that was finalised just before the Russia-Ukraine conflict intensified.
“Indian wheat prices are lucrative and Bangladesh has no other place to go,” he said. Indian prices are likely to be lucrative in view of the stocks in the country and the projection of a record 111.32 mt of wheat production this year.
Other buyers
Chandrasekaran said Sri Lanka and Indonesia are other buyers of Russian wheat who could turn to India. “Sri Lanka is facing a foreign exchange crisis. Indonesia faces the same situation as Bangladesh,” he said.
Though bids are likely to be higher for this Bangladesh tender, the Delhi-based exporter said there will likely be limited competition among multinational trading houses for this.
Wheat prices have surged nearly six per cent since last month after the Russian-Ukraine conflict intensified. The market is high mainly in view of shipments from the Black Sea coming to a halt. Also, Russia and Ukraine contribute about 30 per cent of the global exports.
Traders fear that covering 30 per cent of the Russian and Ukraine supplies could be an issue and rising fuel costs have added to the supply woes. This has opened up a window of opportunities for India since it has ample stocks and is nearer to destinations such as Bangladesh, South-East and West Asia.
Egypt interest
Egypt is another country showing interest in India and a delegation from Cairo will be in New Delhi on Friday. But given the tough conditions that Egypt imposes for wheat import, it will take time before any export deal can be struck, said Jain.
Trade sources said some Russian traders are trying to operate in the wheat market through third countries and opening escrow accounts. In particular, the Russian traders are eyeing Africa through the sea route but the conflict has disrupted supplies in their own backyard.