INDIAN WHEAT BIDS $284-$285 EXPECTED ON 12TH DEC 2012

PEC, MMTC tenders of 12^st December 2013 (2,10,000 mt)

Tejinder Narang

Indian PSUs can expect wheat bids around $284-285 FOB per metric ton (pmt) from international participants. 

 Indian prices are generally discounted by US$ 10.00 pmt from Black sea values, which are around $ 278.00 FOB for feed wheat. (Despite superior quality parameters of Indian grain, Indian cargo suffers this value loss due to higher contamination freely gifted by shoddy warehousing.)  Landed in Asia with $ 40 freight component, C&F price of Black Sea feed wheat is ($278+40)= $ 318.00 pmt.

ORIGIN	FOB $/MT	FRT. TO ASIA-$/MT	TOTAL C&F ASIA
BLACK SEA FEED	278	40	318
INDIA *	288	20	308
NET TO PSU	(288-4)=284

After  accounting for $ 20.00 as the shipping cost from Indian port to Far East or Middle East, tendered quotes should therefore be equated to $(318-10)= $ 308.00 C&F. Calculating backwards, FOB cost works out to ($308-20)= $ 288.00 pmt.  Considering $ 4-5 per metric tons as the margin of the trader FOB bidding would be around $ 284.00.

Since the total tendered quantity is about 650,000 tons in the next fifteen days (tenders of 16th and 23rd Dec 2013), any further bullishness may not be feasible.