India may export wheat as stocks bulge

 

 

India, the world's second biggest grains producer, could export 2-3 million tonnes of wheat this year, an official said on Wednesday (March 17), cautioning that domestic inflation would be a key consideration.

 

India's grain holdings are double from year ago with wheat stocks at 18.4 million tonnes, sharply higher than a target of 8.2 million tonnes, while rice stocks were at 26.9 million tonnes compared with a target 11.8 million tonnes.

 

Traders said India could subsidise wheat exports to shed the massive stocks of wheat and rice and reduce storage costs - a strategy adopted six years ago when India last exported significant quantities.

 

However, Indian wheat is not competitive on the international market as local prices have risen on high government payments while Chicago wheat prices are down nearly a third from last year's peak.

 

Abhijit Sen, a member of the federal Planning Commission, said trimming grain stocks was not on top of India's agenda. Domestic stocks are also be needed for the government's welfare programs such as the planned food security law, which will provide wheat and rice to the poor at very low prices, he said.

 

India stopped exports of wheat in early 2007 and common rice in 2008 to ensure supplies and keep prices under control.

 

India's headline price inflation rose to 9.89% in February, the highest since October 2008, mainly due to rising food prices, which climbed nearly 18% from a year earlier.

 

Rising food prices have triggered widespread protests and stalled parliament, mounting pressure on the government and the central bank to act against inflation.

 

India has produced more wheat than it consumes for the past three years and expects a record output 82 million tonnes from the harvest that begins in March.

 

India's government however recently approved the sale of small quantities of wheat from government stocks to neighbouring countries.