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Bangladesh eyes cheaper Indian wheat supplies: Reuters

Bangladesh is aggressively stepping up Indian wheat purchases due to relatively low prices, eating into the market share of the United States, Canada and Australia, regional grain traders said on Tuesday.

Private grain importers in Bangladesh -- the biggest wheat buyer in South Asia -- are finding purchases in small quantities from its neighbour India by trucks, rail and small boats competitive compared with supplies from other leading exporters.

"The United States, Australia, Canada and the European Union -- sales from all these countries to Bangladesh are being hit due to substantial sales by India," Mark Samson, vice-president for South Asia of the US Wheat Associates, said.

Bangladesh grows about two million tonnes of wheat annually but demand is estimated at double that. Trade officials expect private sector wheat imports to grow by about 10 per cent in 2001 due to firm demand for poultry feed and different flour grades.

Regional grain traders said that, while the landed cost of Indian wheat in Bangladesh was working out to be less than $120 a tonne, the price of US hard red winter wheat -- which Bangladesh normally buys -- was quoted at about $165 a tonne.

"The US market share in the last crop season (2000-2001 June-May) fell to about 20 per cent from 48 per cent in the previous year. This year, we are hoping that it remains at the same level -- at 20 per cent," Samson added.

Since India started exporting wheat in 2000 for the first time in three years, it has sold nearly 500,000 tonnes of wheat to Bangladesh, traders say.

Out of the 1.2 million tonnes of wheat which came into Bangladesh last season, about 600,000 tonnes were private sector imports, 300,000 tonnes were received as food aid and another 300,000 tonnes were imported by the government.

Wheat received as food aid is generally used to help provide temporary jobs to poor people in rural areas.

Government imports possible

"This year, the government has so far not stepped in to import wheat. It is trying hard to stay away from imports," said one Singapore trader. They are closely eyeing the rain situation. They might step in by November if things turn out to be bad."

Regional traders said the government had so far avoided wheat imports as the country had adequate carryover rice stocks at hand to meet a small shortfall, if any, in wheat production.

But some traders have different views.

"The domestic wheat supply situation is not looking all that good. It is very likely that the government will come into the market for imports. At this point, I would think they might need to bring in up to 300,000 tonnes," said one regional trader.

Regional traders added that government imports were possible as the demand from the baking industry was expected to rise by about five to 10 per cent in 2001.

Regional traders expressed concern that a lot of Indian wheat was going to Bangladesh through "unofficial channels".

"How do you know about the exact imports if somebody brings in a few thousand tonnes of wheat from India in trucks along with other goods," asked one trader. "They resort to price under-cutting in a big way."

Bangladeshi government sources have said they were exploring ways to tighten controls and prevent wheat coming into Bangladesh through unofficial routes. One possible measure would be to regulate imports through only one point of entry.

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