ITC Group sold Indian wheat shipment rejected by Turkey to a Swiss trader

A wheat consignment from India rejected by Turkey two days ago on phytosanitary grounds was not sold directly to Ankara and was shipped through a Swiss-based trading house, official sources said today.

“The Centre has been notified about the rejection. We learn that the consignment relates to ITC Group, which has not sold directly to anyone in Turkey. The consignment was sold on FOB, basis wait and quality final, by a buyer surveyor in India for an importer based in Switzerland,” an official, who did not wish to be identified as he is not authorised to speak to the media, said.

ITC has not received any information or details about the rejection of the consignments from its buyer, they said.  ITC did not respond to requests for comments on the issue by BusinessLine

Rubella disease

According to reports, Turkey rejected 56,877 tonnes of Durum wheat as the consignment was detected with Rubella disease by the Turkish Ministry of Agriculture and Forestry. The shipments had taken place before India imposed a ban on wheat exports from May 13. 

The consignment is now headed back to the Kandla port in Gujarat from where it was loaded. The wheat has been, possibly, sourced from Madhya Pradesh, which grows the specialised grain used for making pasta and macaroni.

An exporter said if the consignment had been sold on FOB (Free-on-board) basis wait and quality final means a third party, mainly an international surveyor, will inspect the consignment and decide on the tonnage and quality. 

Political move?

“Probably, the contract was signed on the basis of the agreement that price would be based on the basis of clearance at the discharge port,” the exporter, who did not wish to be identified, said. 

A trade analyst wondered how the Rubella disease has cropped up its head all of a sudden. The analyst, who did not wish to be identified, suspected it could be a “political” decision given the fact that Turkey is inimical to India right from the time India scrapped Article 370 that gives special status to Kashmir. 

However, the exporter said the presence of some anti-microbial element could have been found in the consignment and could be a little worrisome. “Turkey is short of wheat and the rejection may not be for political reasons,” he said. 

Options for seller

The fact that the consignment is heading back to Kandla points to a serious quality problem. “Usually when one country rejects, exporters try and sell that in another country. In this case, if Turkey had rejected the shipment, the exporter could have tried to sell it to Egypt, which is further away from there. But that is not happening,” he said. 

The exporter also pointed out that India has since banned wheat exports after the shipment took place, another indicator that the phytosanitary issue may be serious.

India barred wheat exports from May 13 after a heatwave sweeping across the country affected wheat production and the Food Corporation of India (FCI) was unable to procure ample quantity of the grain for supply through ration shops. This was since open market prices were higher than the minimum support price of ₹2,015 a quintal in view of a huge demand for exports. 

Lower output, procurement

Wheat production this year is estimated at 106 million tonnes (mt) lower than initial projections of a record 111.32 mt. The FCI procured only 18.75 mt of wheat as of May 30 against 43.44 mt last year. As of May 1, the parastatal agency had 30.34 mt of wheat stocks against 52.57 mt a year ago. 

Last fiscal, India exported a record of over 7.5 mt of wheat and this year it targeted to top it before the hot weather and poor procurement derailed its plans. India is not a top exporter but the Russia-Ukraine war has resulted in supply shortage and prices soaring leading to demand for its wheat. 

Russia and Ukraine make up 30 per cent of the global market and the geopolitical crisis has resulted in supplies from both nations being affected. 

Benchmark wheat futures on the Chicago Board of Trade are currently ruling at $10.937 a bushel ($401.87 a tonne), a three-week low. In the domestic market, the weighted average modal price (rates at which most trades take place) in various agricultural terminal markets was ₹2,066 a quintal. 

Published on

June 01, 2022

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