Bangladesh Purchases 50,000 tonnes of Wheat from Agrocorp at $448.38 per tonne

Bangladesh has accepted a single bidder's offer to import 50,000 tonnes of wheat after running out of options to obtain the cereal at a competitive price, especially since India banned the grain's shipments on May 13."Bangladesh has confirmed the first wheat tender, which was held on July 5th, at $448.38 per tonne." "It is a single offer made by Singapore's Agrocorp International," said Rajesh Paharia Jain, a Delhi-based exporter.

Bangladesh cancelled its second tender in three weeks to import 50,000 tonnes of wheat on July 14 because only one bid was received. Intra Business Pte Ltd of Singapore had offered the grain for $476.38 per tonne.

"Bangladesh has lost its main supplier since May 14, when India banned wheat exports." It had previously received wheat at a far more competitive price. "The Indian ban is proving to be a significant handicap for Dhaka," Jain said.

While cancelling the July 14 tender, Bangladesh kept the July 5 tender open, in which it was offered wheat from Australia, Germany, Bulgaria, Romania, or Canada. "It has to look for other origins because it has few choices," he explained.

Dhaka chose the July 5 offer as global wheat prices have recovered from a five-month low reached on July 15. Benchmark wheat futures on the Chicago Board of Trade are currently quoted at $8.24 per bushel ($303.10 per tonne). According to the International Grains Council, US Soft Red Winter wheat is currently available for $339 per tonne, while French grade I is available for $359 in Europe. The price of US Hard Red Winter wheat is $384, while Argentine wheat is $423.

The problem for Bangladesh in obtaining wheat is that even among the consignments cleared by the Indian government based on letters of credit (LCs) opened prior to the ban on exports, the volume is small. During the fiscal year 2021-22, Bangladesh accounted for 4.08 million tonnes (mt), or 56% of India's total wheat exports of 7.23 mt. In April-May of this fiscal year, India exported 2.6 million tonnes of wheat, up from 0.65 million tonnes in the same period last year. Dhaka was the top buyer once again, importing 0.64 mt.

Bangladesh informed the Indian government last month that it would require at least 6.2 million tonnes of wheat this fiscal year to meet rising demand. Bangladesh cancelled another tender on June 22 after Agrocorp International offered wheat at $548.38 per tonne. At the time, the Singapore-based firm was the sole bidder.

Bangladesh has been issuing wheat import tenders on a regular basis in order to compensate for the shortfall in supplies from Russia. Wheat exports from Russia and Ukraine, which account for 30% of global trade, have been hampered by their ongoing conflict.

According to reports earlier this week, Russian wheat exports are doubling the rate of shipments made last year. This may give officials in Dhaka some hope.

The lowest bid for the Bangladesh wheat tenders opened on April 11 was offered. Bagadia Brothers of India offered $399.69 per tonne. However, by the time Bangladesh issued its next tender on May 10 and opened it for public comment on May 23, wheat prices in the global market had risen as India prohibited the export of the cereal.

India has banned wheat exports because this year's crop was harmed by a heatwave that swept across the country in March and April. The crop was initially estimated at a record 111.34 mt, but the Ministry of Agriculture revised it down to 106.41 mt. The trader, on the other hand, sets it even lower.

Another factor was the Food Corporation of India's 19 mt wheat procurement from farmers, which was down more than 50% from a record 43.33 mt last year. Because Indian wheat was in high demand on the global market, and supplies from Russia and Ukraine were threatened, the Narendra Modi government prohibited its exports.

The Indian ban was also influenced by rising wheat prices and rising inflation. Wheat prices were above $2,400 per quintal prior to the export ban, compared to the MSP of $2,015 per quintal set for this year. Prices remain above the MSP, albeit at a lower level than in the first half of May. The current average weighted modal price (the rate at which most trades occur) is $2,115 per quintal.

(Inputs from Business Line)