Mumbai: Four multinational corporations with offices in India – Cargill, Louis Dreyfus, A.C. Toepfer and Glencore – have put in their price quotes for supplying wheat to India.
The tenders, which were submitted in response to the Indian Government’s announcement to buy wheat on call option basis, may be opened on Tuesday; but from the line-up it is increasingly clear who the winner would be. While Cargill has offered a maximum of 2.7 lakh tonnes, the other three have offered 2.5 lakh tonnes each.
The Government may contract for a lower quantity of 1.8 lakh tonnes, it is believed.
According to sources close to the deal, the strike prices quoted by both Louis Dreyfus and A.C. Toepfer are above $400 a tonne with a premium of $35.0-37.5 a tonne. Cargill has quoted $407 plus premium of $30 for delivery at Kandla and $399 plus premium of $30 for delivery at Mundhra.
From available information, Glencore appears to have quoted the most competitive price of $380 a tonne with a premium of $35 a tonne for Mundhra and $393 a tonne plus $35 for Kandla.
The offers are for delivery of cargo at Kandla and/or Mundhra ports in Gujarat. The option to seek delivery is to be exercised on or before August 16. The goods will have to arrive at the Indian port before November 1, that is within 75 days from the date of the exercise of call option. If the call option is not exercised by August 16 and India does not want to take delivery, the overseas supplier will have to be paid the premium amount.
Prospects improve
With improvement in world wheat production prospects for 2008-09, forward prices have begun to soften. Overseas suppliers invariably add a risk premium to the price while dealing with India. The good news on the home front is that wheat procurement by the Food Corporation of India (FCI) has already touched 6 million tonnes. Almost 100 per cent of arrivals in Punjab and close to 90 per cent of arrivals in Haryana have been mopped by the Government parastatal. At this rate, FCI would comfortably meet the procurement target of 15 million tonnes, it is believed. Even as the Government is trying to import, wheat prices on Chicago Board of Trade have crashed.
The tenders, which were submitted in response to the Indian Government’s announcement to buy wheat on call option basis, may be opened on Tuesday; but from the line-up it is increasingly clear who the winner would be. While Cargill has offered a maximum of 2.7 lakh tonnes, the other three have offered 2.5 lakh tonnes each.
The Government may contract for a lower quantity of 1.8 lakh tonnes, it is believed.
According to sources close to the deal, the strike prices quoted by both Louis Dreyfus and A.C. Toepfer are above $400 a tonne with a premium of $35.0-37.5 a tonne. Cargill has quoted $407 plus premium of $30 for delivery at Kandla and $399 plus premium of $30 for delivery at Mundhra.
From available information, Glencore appears to have quoted the most competitive price of $380 a tonne with a premium of $35 a tonne for Mundhra and $393 a tonne plus $35 for Kandla.
The offers are for delivery of cargo at Kandla and/or Mundhra ports in Gujarat. The option to seek delivery is to be exercised on or before August 16. The goods will have to arrive at the Indian port before November 1, that is within 75 days from the date of the exercise of call option. If the call option is not exercised by August 16 and India does not want to take delivery, the overseas supplier will have to be paid the premium amount.
Prospects improve
With improvement in world wheat production prospects for 2008-09, forward prices have begun to soften. Overseas suppliers invariably add a risk premium to the price while dealing with India. The good news on the home front is that wheat procurement by the Food Corporation of India (FCI) has already touched 6 million tonnes. Almost 100 per cent of arrivals in Punjab and close to 90 per cent of arrivals in Haryana have been mopped by the Government parastatal. At this rate, FCI would comfortably meet the procurement target of 15 million tonnes, it is believed. Even as the Government is trying to import, wheat prices on Chicago Board of Trade have crashed.
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