August 13, 2013 / 12:10 PM / 6 years ago

UPDATE 2-Bangladesh buys 200,000 T of wheat from Ukraine to boost reserves

* Wheat to be imported under state-to-state deal

* Move follows lower reserves in government silos

* Domestic flour prices climb despite drop in global prices (Adds details)

By Ruma Paul

DHAKA, Aug 13 (Reuters) - Bangladesh has signed a government-to-government deal with Ukraine to import 200,000 tonnes of wheat to boost reserves, the head of the state grain buyer said, as it seeks to meet growing domestic demand.

Stocks of rice and wheat in government warehouses have fallen to nearly 1.1 million tonnes from more than 1.4 million a year ago.

Wheat consumption is rising in Bangladesh in line with steady economic growth and changes in lifestyle, though rice remains the staple food for its 160 million people.

“We’ll import wheat from Ukraine under a state-to-state deal. And the wheat is be shipped within 90 days,” Ahmed Hossain Khan of the Directorate General of Food told Reuters on Tuesday, adding the purchase is at $307 a tonne, including CIF liner out.

In 2011, Bangladesh imported 160,000 tonnes of wheat in two phases from Ukraine in its first government deal with Kiev.

The state agency plans to import 850,000 tonnes of wheat in the financial year that started in July, up from around 350,000 tonnes the previous year and against a planned 800,000 tonnes.

The state grains buyer also issued an international tender on Monday to buy 50,000 tonnes of wheat, the first for the current financial year.

The government imports wheat to run welfare programmes for the poor and to keep domestic prices stable. Flour prices have gone up in recent months despite a drop in global markets.

Apart from the Bangladesh government, private traders also import about 2.5 million tonnes of wheat a year to help meet local demand of 4 million tonnes, and domestic output amounts to about 1 million tonnes.

Ukraine’s Agriculture Ministry has said the former Soviet republic is likely to increase its wheat exports to about 9 million tonnes in the 2013/14 July-June season from 7 million tonnes in 2012/13, thanks to a bigger harvest.

It said Ukraine planned to supply grain to its traditional consumers in the Middle east and North Africa but also increase shipments to new markets in Asia.

Ukraine, which harvested about 23 million tonnes of wheat in 2013, has already increased wheat exports to 792,000 tonnes so far in 2013/14 from 587,000 tonnes in the sale period in 2012/13, according to the data provided by the government. (Reporting by Ruma Paul; Additional reporting by Pavel Polityuk in KIEV; editing by Jane Baird)

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