July 31, 2012

India to sell wheat stock to relieve storage pressure

The Indian government has started to let out wheat from its warehouses in light of increasing world and domestic demand, as well as growing excess stock.

Due to dry weather conditions in major wheat growing areas in US and in Russia among others, the output for 2012-13 is forecast to drop drastically amid rising demand pushing the price of the commodity up.

Currently, Australian wheat is priced at US$350 per tonne while the Black sea or the Ukrainian variety is at US$300 per tonnes. But Indian variety is priced at US$280-US$290 a tonne which is lower than other suppliers.

Competitive pricing has boosted the demand for India's wheat in the global market and also in domestic market. To curb the price rise and also to reduce stress over the warehouses in the country India government has started releasing wheat. On the back of record food grain production for past two to three years India's warehouses are stressed with the surplus production.

India is expected to produce around 93.90 million tonnes and domestic demand is just 75 million tonnes. In India's National Commodity and Derivatives Exchange (NCDEX) wheat for August delivery traded up 0.5% to INR1415 (US$25) per qtl.