July 16, 2007

Indian Bureaucrats Make for Lousy Wheat Traders

July 5 (Bloomberg) -- If bureaucrats in New Delhi really possess the ability to predict wheat prices in Chicago, they should be given trading limits urgently.
They don't have any such clairvoyance, something proved last week when the Indian government reinstated a tender to import 1 million tons of the grain, less than a month after canceling it. At the time, it judged the price being offered by Archer Daniels Midland Co. and Cargill Inc. to be too high.
Between then and now, the price of wheat futures on the Chicago Board of Trade has moved up to $5.7150 per bushel from $5.1075, a 12 percent jump. On 1 million tons, the difference works out to $22 million.
``This is sheer mismanagement,'' economists Sumita Kale and Laveesh Bhandari at New Delhi-based Indicus Analytics, a research firm, wrote this week in their newsletter. ``Surely the government should have learned from last year's experience?''
Last year, the government was caught napping.

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