India scraps wheat import tender due to high bids

NEW DELHI: An Indian firm, which had sought bids for wheat imports on behalf of the government, will not buy against its call option tender due to high prices, a senior government source said on Tuesday. Trade officials said Cargill Inc, Paris-based Louis Dreyfus, Germany's Alfred C. Toepfer and Swiss firm Glencore International AG had bid in the tender floated by the National Collateral Management Services. The government is keen to ensure supplies of the grain at a time when rising food prices have pushed inflation to three-year highs.

A panel of experts formed by the finance ministry took the decision to scrap the tender, the government official, who did not wish to be identified, told Reuters. He added that talks were likely with the lowest bidder to see if a better deal could be worked out. A call option gives the buyer the right to purchase a commodity at a specified price within a given period. Prices are agreed in advance return for a non-refundable premium.

Earlier this month, India took an option to buy 180,000 tonnes of wheat from Cargill at $406 a tonne. West Bengal state has issued a tender to buy 180,000 tonnes of wheat from local or foreign suppliers, and junior food minister Akhilesh Prasad Singh said on Monday the government has allowed three other states to do likewise. India imported 1.8 million tonnes of wheat in 2007, down from 5.5 million tonnes the previous year when a poor crop forced it to plunder world markets for the first time in six years.