Wheat import plan goes haywire as Moscow stops export
Saturday, 7 August 2010
Jasim Uddin Haroon
The Bangladesh move to procure around 25 per cent of the total wheat import from Russia has suffered a setback as the latter has imposed a ban on grains export, importers said.
Private importers have opened letters of credit (L/Cs) for around 600,000 tonnes of wheat while government agencies for 200,000 tonnes to buy wheat from Russia against the country's annual requirement of around 3.2 million tonnes.
Officials said this ban would affect the government move to build up a buffer stock of wheat. The domestic procurement of rice and paddy has been well below the target this year.
"The government wanted to compensate for the shortfall in domestic procurement through the import of wheat. The ban definitely will have a negative impact on the government move," said a senior official at the Directorate of Food.
On Thursday, Valdimir Putin, the Russian prime minister, announced the ban on the country's grain exports. The decision takes effect from August 15 and will last until December 31.
The move caught traders and food producers by surprise as wheat prices sprang to fresh two-year highs.
"I opened L/C to import 40,000 tonnes of wheat from Russia. Now the supply of the grain has become totally uncertain following this official ban by Putin government," Mohammed Ali, chairman of Imam Group, a leading wheat importer, told the FE.
"This comes as a surprise for us as the Russia has been a reliable supplier for long," Ali said.
Another importer said: "I opened L/C for 80,000 tonnes of wheat. My suppliers Thursday informed me that they would not be able to ship the grain following the government ban."
He said the Russian ban has created an unsettling effect on the country's grain market as Bangladesh imports the major part of wheat from Russia.
Local traders import around 2.0 million tonnes of wheat from Russia and Ukraine. This year the region faced a setback after a severe drought and wildfire devastated crops in both the countries.
Soon after Russian announced its ban, Ukraine - where the wheat output was dropped by 15 per cent - exporters have increased the prices by nearly 20 per cent to $ 250 a tonne.
Bangladeshi importers opened L/C for wheat purchase worth $212 a tonne.
The wheat produced by Canada, the USA and Australia are of finer quality and its prices are much higher than those produced by the Black Sea region.
Importers however said the supply will not be affected during Ramadan as its demand falls sharply during the holy fasting month.
Bangladesh produces around 800,000 tonnes of wheat a year, mostly consumed at the farmer's level.
The Bangladesh move to procure around 25 per cent of the total wheat import from Russia has suffered a setback as the latter has imposed a ban on grains export, importers said.
Private importers have opened letters of credit (L/Cs) for around 600,000 tonnes of wheat while government agencies for 200,000 tonnes to buy wheat from Russia against the country's annual requirement of around 3.2 million tonnes.
Officials said this ban would affect the government move to build up a buffer stock of wheat. The domestic procurement of rice and paddy has been well below the target this year.
"The government wanted to compensate for the shortfall in domestic procurement through the import of wheat. The ban definitely will have a negative impact on the government move," said a senior official at the Directorate of Food.
On Thursday, Valdimir Putin, the Russian prime minister, announced the ban on the country's grain exports. The decision takes effect from August 15 and will last until December 31.
The move caught traders and food producers by surprise as wheat prices sprang to fresh two-year highs.
"I opened L/C to import 40,000 tonnes of wheat from Russia. Now the supply of the grain has become totally uncertain following this official ban by Putin government," Mohammed Ali, chairman of Imam Group, a leading wheat importer, told the FE.
"This comes as a surprise for us as the Russia has been a reliable supplier for long," Ali said.
Another importer said: "I opened L/C for 80,000 tonnes of wheat. My suppliers Thursday informed me that they would not be able to ship the grain following the government ban."
He said the Russian ban has created an unsettling effect on the country's grain market as Bangladesh imports the major part of wheat from Russia.
Local traders import around 2.0 million tonnes of wheat from Russia and Ukraine. This year the region faced a setback after a severe drought and wildfire devastated crops in both the countries.
Soon after Russian announced its ban, Ukraine - where the wheat output was dropped by 15 per cent - exporters have increased the prices by nearly 20 per cent to $ 250 a tonne.
Bangladeshi importers opened L/C for wheat purchase worth $212 a tonne.
The wheat produced by Canada, the USA and Australia are of finer quality and its prices are much higher than those produced by the Black Sea region.
Importers however said the supply will not be affected during Ramadan as its demand falls sharply during the holy fasting month.
Bangladesh produces around 800,000 tonnes of wheat a year, mostly consumed at the farmer's level.