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Bangladesh may struggle to buy much-needed wheat: traders

[DHAKA/HAMBURG] Bangladesh has a major wheat import requirement after floods damaged this year's crops, but global importers are reluctant to sell to the country due to tough state purchasing conditions and slow unloading in ports, traders say.

The country started ramping up imports after floods in April damaged crops, with volumes seen swelling to 6.5 million tonnes in the year to June 2018.

Bangladesh imported 5.8 million tonnes of wheat in the year to June 2017, according to its food ministry.

The development should be welcomed by global grain trading houses, suffering from slack demand and low earnings as the world in general faces high supplies of cereals.

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But when Bangladesh's state buyer issued an international tender to purchase 50,000 tonnes of wheat closing on Aug. 6, only two trading houses submitted offers.

Just three traders offered in another tender for 50,000 tonnes on July 26 and only two offered on July 11.

This compares to 10 or more trading houses offering in similar tenders from Egypt and Tunisia.

"I am not offering to sell in Bangladesh's wheat tenders," one European grain trader said. "There is too high a risk you could lose money."

"Bangladesh is still able to buy, but as a poor country I doubt it is getting the lowest prices possible," another trader said, adding "I need business but I cannot risk losing money."

In 2015, Bangladesh rejected French wheat shipments after the government faced criticism for importing poor quality wheat from Brazil. Later Bangladesh also rejected three shipments of Russian wheat over quality concerns.

"The big issue is their tough quality standard evaluation and assessment and the way they examine the quality at unloading ports. They can also reject part of the consignment and then it's a nightmare what to do with the rejected wheat," the second trader said.

Bangladesh's government purchases on cost and freight liner out terms, which includes costs for ship unloading.

"The liner out terms also increase risks for the grain exporters," another trader said, with slow unloading at Bangladeshi ports raising risks for trading houses. "All these risks add up to hardly anyone offering in Bangladesh's tenders despite everyone being very keen to find new business."

REUTERS

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