Low Supplies, High Exports Boost STC Wheat Tender Prices

NEW DELHI: The State Trading Corporation (STC) on Monday received offers for 330,000 tonnes of wheat from three global firms at sky-high prices against last week’s tender, reflecting shrinking supplies and a surge in US wheat futures on strong exports.

Cargill emerged as the lowest bidder for the tender issued by the STC, offering 65,000 tonnes of grain at $459.90 per tonne, trade officials said. “The market is very, very high, prices are hitting the roof,” an STC official told reporters before bids were opened.

“It will be a tough call for the government to buy at such exorbitant prices,” said Atul Chaturvedi, senior vice-president of trading house Adani Exports.

But another analyst said with prices likely to rise further, the government needed to agree substantial imports now. “Trading companies have offered less than the 350,000 tonnes which the STC had sought. It shows a major crunch in international markets,” said Avinash Raheja of Mumbai brokerage Commtrendz Risk Management.

US wheat futures jumped more than 3% and surpassed $10 a bushel for the first time as strong US export numbers amid dwindling world supplies prompted funds and investors to rush to cover positions. Wheat prices have nearly doubled since the start of the year and industry officials said crop worries and strong global demand will keep them firm until a clearer picture emerges in January about US plantings.

With world wheat stocks seen dwindling to 30-year lows by the end of the 2007-08 marketing year, and India and neighbour Pakistan scouting the market for large volumes, traders see little chance of a big correction in prices. Australian wheat exports are likely to be nearly halved as stocks run out after two successive years of drought.

Glencore offered the STC 200,000 tonnes to be delivered at two Indian ports for $462-465 per tonne, traders said, while Toepfer put forward 65,000 tonnes of wheat for 4 ports in the range of $562-599 per tonne.

The state-run firm PEC this month decided to buy only 150,000 tonnes of wheat at around $395 per tonne against a tendered quantity of 350,000 tonnes.

Three state-run firms, MMTC, PEC and STC have been authorised by the government to import up to one million tonnes of wheat, equally split between them.