India has decided not to buy 1 million tonnes of wheat from the international market immediately because of the high prices quoted by trading firms. 
 
The Indian government wants to import 5 million tonnes of wheat this year (see earlier report ‘India to import wheat, export sugar’). The government-owned State Trading Corporation was in negotiations with two international trading firms, Glencore and Toepfer, for 300,000 tonnes of wheat at $ 263 per tonne, but the food ministry shot down the proposal.

“We are not going to buy because of high prices,” an official told the news agency Reuters.

A State Trading Corporation official later confirmed that they had received a brief letter from the government saying that the tender had been cancelled.

India requires 12 million tonnes of wheat annually to run its public distribution system for the poor. It had stocks of 4.5 million tonnes on April 1, 2007.

The government aims to buy 11 million tonnes from domestic farmers. The estimated wheat crop this year is 73.7 million tonnes, which is more than last year’s output of 69.48 million tonnes.

Hoarding by private buyers has long been considered the reason why India needs to import wheat. To combat this, companies buying more than 50,000 tonnes of wheat have to submit monthly declarations to the government regarding quantity bought and stocks held.

According to some sources, India is waiting for larger stocks of wheat to become available from Australia and other countries, which could drive down the price somewhat.

May 31, 2007