India unlike to export wheat despite record harvest

Wheat exports are unlikely to materialise for India despite another record harvest that would swell state inventories to 40 million tonnes - nearly double of Australia's annual production.

The Indian government's farm-support programme will buy about 24 million tonnes of wheat in 2010-11, after a harvest expected at 82 million tonnes, according to the USDA's New Delhi bureau. The buying programme could, as of June 1, increase state stocks by 20% on-year to within 1.3 million tonnes of the record high set in 2002.

But the bureau said wheat exports are unlikely to happen as the Indian government does not want to risk further food price inflation.

Even if exports were permitted, the high price of Indian wheat, underpinned by a state support price of Rs11,000 (US$237) per tonne in 2010-11, would render it uncompetitive on the world market.

Indian wheat are likely to sell for US$300 per tonne free-on-board, including taxes and transportation charges, a price that many buyers would not accept unless there is a significant government subsidy which is unlikely under current circumstances.

India's ban on wheat exports began in February 2007. It was temporarily lifted in July 2009 before concerns over the weak monsoon fuelled concerns over food supplies. A return of India to the export market could add pressure to prices, following two years of strong harvests in major exporters including Australia, Canada and Europe.