VISHWANATH KULKARNI, THE HINDU BUSINESS LINE
Public sector entities come out with bids
NEW DELHI, DEC. 2:
After rice, it is now the turn of Indian wheat to possibly stabilise rising global prices.
India’s recent move to continue with additional wheat exports could help keep rising global prices under check, analysts said. In July, the Government had allowed exports of 2 million tonnes (mt) and last week, the Cabinet approved additional exports of up to 2.5 mt.
GLOBAL SUPPLY TIGHT
India, which resumed wheat exports in September 2011, has emerged as one of the major wheat exporter this year, after supplies from multiple origins including Black Sea, Australia and the European Union dwindled on drought slashing the output in these regions.
The International Grains Council expects the global output to decline to 654 mt in 2012-13, down from 695 mt the previous year.
PRICES SOAR
The tight supplies have led to a rise in global wheat prices by up to 40 per cent in recent months. Wheat futures at the Chicago Board of Trade, which ruled at $6/bushel in May, touched a high of $9.4 in July for September delivery before declining marginally.
The near-month December contract was hovering around $8.44 .
“India’s additional wheat exports will cool off the global prices,” said Tejinder Narang, a commodity analyst. But for additional supplies from India, global wheat prices could have touched $425-450 a tonne, as drought had hit production in Russia and Ukraine, Narang said.
The Government is currently the biggest stockholder of wheat, with stockpiles exceeding 40.5 mt, as on November 1, more than twice the prescribed buffer and strategic reserve of 14 mt.
TENDER RUSH
The Cabinet move to allow more wheat exports from Government stocks has led to public sector entities (PSEs), such as PEC, STC and MMTC, coming out with a series of tenders. STC floated three tenders for 2.2 lakh tonnes on Friday. Similarly, PEC came out with three tenders for 1.9 lakh tonnes, while MMTC floated a tender for 1.1 lakh tonnes on Friday.
Interestingly, the bidding deadline for all these seven export tenders floated on Friday for shipment of 5.2 lakh tonnes ends on December 21. Such a trend could have an impact on pricing. Between December 18 and 21, the bidding deadline will end for these nine tenders for export of 7.45 lakh tonnes.
“Price discovery would be elusive,” said Narang, suggesting that tenders had to be staggered to optimise better realisation. The highest bid fetched by any of the PSE so far stood at $328 a tonne by PEC last week.
PSEs have so far tendered around 2.2 million tonnes and actual shipments are around 0.8 million tonnes. India has exported over 3 million tonnes of wheat since September last year, when the Government allowed exports of foodgrains, including rice. Bulk of the Indian wheat exports so far have been destined to the Far Eastern nations such as Korea, Taiwan and neighbouring countries such as Bangladesh, Sri Lanka and Yemen, among others.
Public sector entities come out with bids
NEW DELHI, DEC. 2:
After rice, it is now the turn of Indian wheat to possibly stabilise rising global prices.
India’s recent move to continue with additional wheat exports could help keep rising global prices under check, analysts said. In July, the Government had allowed exports of 2 million tonnes (mt) and last week, the Cabinet approved additional exports of up to 2.5 mt.
GLOBAL SUPPLY TIGHT
India, which resumed wheat exports in September 2011, has emerged as one of the major wheat exporter this year, after supplies from multiple origins including Black Sea, Australia and the European Union dwindled on drought slashing the output in these regions.
The International Grains Council expects the global output to decline to 654 mt in 2012-13, down from 695 mt the previous year.
PRICES SOAR
The tight supplies have led to a rise in global wheat prices by up to 40 per cent in recent months. Wheat futures at the Chicago Board of Trade, which ruled at $6/bushel in May, touched a high of $9.4 in July for September delivery before declining marginally.
The near-month December contract was hovering around $8.44 .
“India’s additional wheat exports will cool off the global prices,” said Tejinder Narang, a commodity analyst. But for additional supplies from India, global wheat prices could have touched $425-450 a tonne, as drought had hit production in Russia and Ukraine, Narang said.
The Government is currently the biggest stockholder of wheat, with stockpiles exceeding 40.5 mt, as on November 1, more than twice the prescribed buffer and strategic reserve of 14 mt.
TENDER RUSH
The Cabinet move to allow more wheat exports from Government stocks has led to public sector entities (PSEs), such as PEC, STC and MMTC, coming out with a series of tenders. STC floated three tenders for 2.2 lakh tonnes on Friday. Similarly, PEC came out with three tenders for 1.9 lakh tonnes, while MMTC floated a tender for 1.1 lakh tonnes on Friday.
Interestingly, the bidding deadline for all these seven export tenders floated on Friday for shipment of 5.2 lakh tonnes ends on December 21. Such a trend could have an impact on pricing. Between December 18 and 21, the bidding deadline will end for these nine tenders for export of 7.45 lakh tonnes.
“Price discovery would be elusive,” said Narang, suggesting that tenders had to be staggered to optimise better realisation. The highest bid fetched by any of the PSE so far stood at $328 a tonne by PEC last week.
PSEs have so far tendered around 2.2 million tonnes and actual shipments are around 0.8 million tonnes. India has exported over 3 million tonnes of wheat since September last year, when the Government allowed exports of foodgrains, including rice. Bulk of the Indian wheat exports so far have been destined to the Far Eastern nations such as Korea, Taiwan and neighbouring countries such as Bangladesh, Sri Lanka and Yemen, among others.
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