Global price rise to fuel pvt wheat import costs

Wheat imports by private sector players, which have so far been cheaper than government imports, are set to get costlier owing to rising global prices and freight charges and the government's frequent import tenders, industry officials have said on Friday.

Private sector imports so far were in the range of $175-190 a tonne. But industry officials believe they may not be able to contract deals at these prices going ahead.

"International wheat prices have firmed up significantly since the government first floated a tender to import 5,00,000 tonne wheat," an official with a domestic trading house said.

The government bought its first wheat consignment in February from Australia's AWB at $178.75 a tonne, on cost and freight basis.

The official said since February both wheat and freight costs have escalated, and AWB is now offering wheat to private importers at about $220 a tonne.

One of the primary reasons for higher wheat prices is tight supply in the international market. International Grains Council has estimated global wheat output in the crop year that started in July at 596 million tonne, down 21 million tonne from the previous year figure.

The agency said wheat output is suffering this year owing to hot and dry weather in major crop producing regions, particularly the EU, the US, Turkey, Argentina and Australia.

Both the US and Australia have already cut their wheat output estimates for this year because of deteriorating crops that need more rains.

The official said higher import forecasts for India, Brazil and some countries in the EU are also fuelling the price rise in the international market.

India is expected to import about 5-5.5 million tonne wheat this year.

"There is already very limited stock in the international market, and private importers have to compete with the government to lay their hands on it at competitive rates," another industry official said.

He said the cost of government wheat imports is steadily escalating, which will adversely impact private imports as well.

In its last tender to import 4,00,000 tonne wheat, the government got bids in the $210-239 a tonne range.

"If international sellers can sell wheat to India at $210 a tonne, why would they quote lower prices for private buyers... they are not running a charity," the official said.