Банкеръ Weekly

Briefs

THE STATE RESERVE'S GRAIN DREAMS

The State Reserve and Wartime Stores Agency made two unsuccessful attempts, in September and October, to replenish its half-empty warehouses with grain from the new crop. In September the agency invited a tender in compliance with the Public Procurement Act for supply of 50,000 tons of milling wheat at BGN160/ton before VAT. The tender failed as nobody was willing to sell the commodity at that price. As in August grain from the fields was bought at BGN200/ton, both producers and traders were expecting higher purchase prices. The second attempt was in end-October, when a deal for delivery of 100,000 tons of imported soft wheat was closed on the floor of the Plovdiv Commodity Exchange. The State Reserve was the buyer. But although the deal was registered, no real action followed due to the lack of bank guarantees which should had been presented by the importer against the L/C of the state-run institution, the Head of the exchange Krassimir Davchev claims. The price of the imported wheat under the contract was USD130/ton (BGN212/ton as per the USD/BGN exchange rate at that time), with delievy at a Bulgarian port, sources of the State Commission on Commodity Exchanges and Wholesale Markets said. There is simply no such a price, experts commented. In October grain was traded at BGN258-300/ton before VAT on teh domestic market, while quotations on international markets were in the range of USD160-167/ton. According to the Executive Director of the Sofia Commodity Exchange Hristo Milenkov, the State is already late with its decision for import of wheat. Back in the summer Romania agreed import of 1,800,000 tons at relatiovely acceptable prices - USD145/ton, and Bulgaria will now have to hold negotiations in order to effect import of wheat at BGN360-380/ton, Mr. Milenkov points out. The Deputy Minister of Agriculture and Forests Boyko Boev and the Deputy Head of the State Reserve Yovchev claim there is sufficient grain in the country until the new harvest. According to Mr. Boev, about 378,000 tons of grain from this year's crop were found in local wharehouses, but the owners were reluctant to sell in expectation of still higher prices after the New Year. Duty-free import of flour is being considered as well. This will inevitably affect millers and result in a close-down of a number of mills. And State Reserve insiders claim that the grain it has in stock will be sufficient for intervening on the market until the next crop. But both Mr. Boev and Mr. Yovchev speak about import of at least 100,000 tons withi a month. Most of the experts in the branch believe that import of grain will be necessary. Despite the lack of official data, it is known that the State Reserve keeps in stock about 250,000 tons of wheat, 140,000 tons of which have already been sold out. Its hardly probable that the remaining 110,000 tons will suffice till August 2004. Even if we add the quantities found in private warehouses, we cannot be certain that Bulgarians' bread would be ensured. Therefore, urgent, efficient measures should be taken before the market disproves Agriculture Minister Mehmed Dikme's consecutive forecast that bread prices cannot reach BGN1.50/kg.

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