Wheat import tenders may now be invited in July

NEW DELHI: India is expected to finalise timing of a new wheat tender in the next few days. The most likely date is July because it becomes difficult to ship in grain after October when ports get choked with imported urea.

The food ministry is also expected to consider the option of floating a domestic tender for wheat in which local companies can buy wheat from the market and deliver it to FCI godowns. If the domestic tender route is adopted, any Indian company may bid for quantities which it would procure from either the local markets or the world market.

That way STC itself would not be entering the world market directly or negotiating best prices with foreign trading companies. “The domestic tender route is a good alternative but it may create an upward spiral in the local market because of the government tender,’’ said a trader.

There are three key factors that food minister Sharad Pawar would be considering while taking a decision on the new tender. One, he will assess the procurement and offtake of wheat this year. While FCI will procure 110 lakh tonne by end-June, it is supplying 9 lakh tonne each month to ration shops. So there is still plenty of wheat available with the government.

Two, the minister will take into consideration the size of crops in EU and USA. These, along with Canada, are expected to be the main suppliers of wheat to India this marketing season. Both Ukraine and Australia are unlikely to be able to export much quantity this time. The pytosanitary laws will be amended in time for American wheat to participate in the next Indian tender.

Three, the ministry will keep an eye on the movement of wheat futures on Chicago Board of Trade. “We are closely tracking wheat futures overseas. For the moment they are bullish in the far months. This means that the fundamentals do not support any climb down in world wheat prices. That could be a googly,’’ said an official.

But though these factors will play a vital role in the ministry’s decision, realistically it cannot postpone the shipments beyond October. This is because India starts importing urea in large quantities in those months. That makes it difficult for STC to quickly unload wheat from ships and adds to the demurrage costs.