Wheat trading business

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Wheat trading business

  1. 1. Santosh Kumar Sahu Agriculture & Food Professional From India [email_address] 91+9429898730 Wheat
  2. 2. Some Important Facts <ul><li>The amount of wheat traded internationally exceeds that of other grains . </li></ul><ul><li>Protein and caloric content of wheat is greater than that of any other cereal crops. </li></ul><ul><li>Most Wheat is consumed in the form of baked goods mainly bread, therefore wheat grains must be milled before consumed . </li></ul><ul><li>Wheat is also important as an ingrediant in compound feedstuffs,starch production, and as a feedstock for ethanol formation. </li></ul>
  3. 3. Some Important facts <ul><li>Approximate Wheat Production Cost per Acre </li></ul><ul><li>For Seed @10 kgs/acre = Rs. 200 ( approx) </li></ul><ul><li>For N Fertilizer @ 60 Kgs/acre = Rs. 300 ( approx) </li></ul><ul><li>For PK Fertilizer @ 80 kgs/acre = Rs. 300 ( approx) </li></ul><ul><li>Herbicided @ 800 ml/acre = Rs. 200 (approx) </li></ul><ul><li>Water @ 17 hrs/acres = Rs. 3500/acre (approx) </li></ul><ul><li>Other small expenses including roguing = Rs. 3500/acre (approx) </li></ul><ul><li>--------------------------------------------------------------- </li></ul>Total Expenditure Assuming the farmer has land = Rs. 8,000/acre
  4. 4. Revenue Generation <ul><li>Selling Price at growers level = Rs. 1200/qtls </li></ul><ul><li>Yield per acre (avg) = 10 qtls/acres </li></ul><ul><li>Total Income out of grain = Rs. 1,20,000/- </li></ul>
  5. 5. Wheat Grain Trading <ul><li>Wheat Grain trading a high volume low margin trading business. </li></ul><ul><li>It is influenced by Govt as it is one of the socially important food product , hence market regulate the price . </li></ul><ul><li>So Wheat margins depends on various factors like wheat price as farm gate,freight rate,existence of own elevator,currency exchange rate,govt policy(export subsidy),VAT reimbursements etc. </li></ul><ul><li>Average Margin is Export varies from Rs. 100-500/-MT depending upon the logistics cost. </li></ul>
  6. 6. Wheat Grain Trading Scenes <ul><li>Due Mergers and Acqusition between different international groups in last 10 years has increased the level of grain trading . </li></ul><ul><li>The main players are – Cargill, Bunge,ADM (all US companies) . Louis Dreyfus(French Company) and small companies across the country . </li></ul><ul><li>The main method of logistics is through sea except in Africa where the ports are very narrow, hence they prefer cargo services . </li></ul><ul><li>So Wheat Freight cost is the main factor to contribute the max share to its landed price in importing country. </li></ul>
  7. 7. Major Logistics Management <ul><li>Basically wheat is traded through ships as dry bulk cargo vessels . </li></ul><ul><li>When Vessel demand is very high the freight cost may be doubled. </li></ul><ul><li>Delays in vessel loading due to poor infrastructure adds more cost to the freight cost. </li></ul><ul><li>Delays in Grain fumigation also add costs </li></ul><ul><li>Delay in Custom clearance also add costs </li></ul><ul><li>Delay in getting phytosanitary & quality certificates also add cost </li></ul>
  8. 8. Most Important Countries <ul><li>Projected Import-Export(EXIM) size is 134 million MT by 2018 . </li></ul><ul><li>Main Exports will be from EU-27,Canada,Australia, and Argentina. </li></ul><ul><li>Main Importing Countries will be Egypt, EU,Indonesia,Japan,Brazil,Algeria etc </li></ul><ul><li>Source: OECD-FAO Outlook 2009-18 </li></ul>
  9. 9. Wheat Flour <ul><li>Like Wheat grain , wheat milling is also a very thin margin business. </li></ul><ul><li>It depends on good technical knowledge & equipment, price risk management instrument, well establised relationships with wheat supplies &wheat flour buyers, clear and predictatable policy mechanism etc. </li></ul><ul><li>Wheat grain business is more lucrative than wheat flour due to lower import tariff and easy transportation, long shelf life of grain than flour. </li></ul>
  10. 10. Main Wheat Flour Trader <ul><li>Exporter : EU,Turkey,Argentina,Kazakistan,Pakistan,Russia federation etc. </li></ul><ul><li>Importers : </li></ul><ul><li>Bolivia,Hongkong,Angola,Iraq,Indonesia,Afganistan,Brazil,Tazakistan,Libiya,Uzbegistan etc . </li></ul>
  11. 11. T hanks Santosh Sahu [email_address] 91+9429898730

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