February 23, 2012

India likely to export wheat only after June

India's wheat exports will only kick in after government inventories are stocked around mid-year, as the government-mandated minimum purchase price is more attractive to farmers than export prices, trade executives said Wednesday (Feb 22).

Traders will likely hold back from making purchases until the government completes its stock-building program, as buying at levels near the government price would reduce the competitiveness exports on the world market, said a senior Mumbai-based trader of an international commodities trading company.

India raised the minimum purchase price for wheat by about 15% to INR1,285 per 100 kilograms (around US$260 a tonne) in October to increase planting interest just ahead of the sowing of crops. Meanwhile, Indian wheat is being quoted for export around US$268-US$270 a tonne, free on board.

The government is targeting a 12.6% increase in wheat purchases, to 31.89 million tonnes during the fiscal year that starts April 1, which will likely put it on track to complete its buying by the end of June.

India has exported limited supplies of wheat since an export ban was lifted in September, as local prices have been quoted on par with or higher than international rates. Between 450,000 and 500,000 tonnes of wheat has been shipped from the country to date.

Most of the shipments have been to the Middle East, with a small quantity having also been shipped to neighbouring Bangladesh. Around 15,000 tonnes of wheat was being loaded Wednesday (Feb 22) on to a vessel at India's western port of Mundra for shipment to the Middle East, two senior trade executives said.
 

Industry officials are optimistic that supplies will be available for export on the back of a record crop forecast for the crop year that ends June 30.

M.K. Dattaraj, former president of the Roller Flour Millers Federation of India, said prices will probably fall below the minimum purchase price in the second half of the year, adding that it is "too early" to forecast the amount of wheat that will be available for export.

The government has forecast 2011-12 wheat output at a record 88.31 million tonnes, but officials have said the figure could exceed 90 million tonnes thanks to favourable weather.

Some of the country's early wheat has started arriving in markets in the western province of Gujarat--no more than 300 tonnes to 400 tonnes daily, industry participants said.

The wheat harvest in the country's breadbasket northern region usually begins in April.