FCI's wheat export tenders receive poor response

The Food Corporation of India (FCI) has received a poor response to its wheat-export tenders floated by trading firm PEC. Sources said for the recent tender of 110,000 tonnes through the Mundra port, it received bids for 40,000 tonnes at $271 a tonne.

Currently, negotiations are on with the bidder to lift the entire quantity.

For a tender of 70,000 tonnes through the Krishnapatnam port, the FCI received bids for 35,000 tonnes at $275 a tonne. On Wednesday, the FCI will float two tenders: One for 80,000 tonnes through the Kakinada port and the other for 70,000 tonnes through the Kandla port. The bids will open on March 12. The quantity will be shipped in a month from the date of closure of the bids.

Since the government had allowed two million tonnes (mt) of exports in August, the FCI has exported one million. “We hope the quantity allocated for exports would be met by the scheduled time (June),” said an official. “In four months, the FCI would easily be able to sell another million.”

Faced with massive stocks in warehouses and plinths, the government had proposed wheat be exported. Against the total requirement of 11.2 mt (8.2 mt of buffer stocks and three mt of strategic reserves), FCI currently has 24.2 mt of wheat at its warehouses. The government has, on several occasions, voiced concern about the surplus grain stocks.

Wheat prices, meanwhile, have risen about 10 per cent in the past month due to restricted supply from Ukraine, the world’s fifth-largest exporter by volume, owing to a stand-off between Russia and Western powers over that country. Ukraine sells much of its grain to Egypt, the world’s largest importer, and to other countries in Africa and West Asia.

Wheat prices rose to $269.22 a tonne at the London International Financial Futures and Options Exchange for near-month delivery, compared with $245.97 a tonne on February 3. On Wednesday, wheat for delivery in April slumped marginally to trade at Rs 1,550 a quintal on the National Commodity & Derivatives Exchange, after hitting a high of Rs 1,562 a quintal on Tuesday. A month ago, it stood at Rs 1,510 a quintal. Consequently, FCI is unlikely to achieve the targeted revenue of Rs 3,400 crore due to lower average realisation. Last year, FCI’s wheat had an average premium of 10 per cent over the prevailing market price, with average realisation of 4.2 mt of exported wheat at $300/tonne. This year, the average realisation so far works is about $275 a tonne. Therefore, the target of Rs 3,400 crore through the export of two mt of wheat is likely to me missed.

The shortage of supply in the global markets has resulted in an opportunity for India to execute more export orders. Vimal Sethi, proprietor of Pooja Trading Corporation, an Amritsar-based wheat exporter, said, “Currently, global demand of wheat is weak. Indian exporters are looking to ship as much quantity as possible due to the high volatility in prices. The current price is attractive.”

Last year, countries such as South Korea, Ethiopia, Bangladesh, Thailand and Indonesia were the primary buyers of Indian wheat.