November 29, 2012

India's wheat exports could reach three million tonnes from government stocks in 2013, after it had sold one million tonnes since April.

According to an official of a state-run trading firm on Wednesday (Nov 28) traders expect wheat shipments from India to rise as a potent combination of dry weather in the US and drought in the Black Sea region hurts global supplies.

"Initially the government has set a limit of two million tonnes for wheat exports, but I think the exports will continue to go much higher," the official told reporters at an industry conference in Singapore.

"We should easily be able to contract up to three million tonnes in 2013, as there is strong demand and supplies from the Black Sea region have slowed," said the official.

Since supplies from Russia and Ukraine have fallen, India has been selling wheat in key markets such as the Middle East, Africa and Southeast Asia. India looks likely to harvest a bumper crop of wheat in 2013, its sixth in a row to exceed demand, after late monsoon rains replenished soil moisture, strengthening prospects for exports for a second year.

"The outlook for the crop looks good and we have more than 40 million tonnes in stocks, so the export programme will continue," the official said. "We will offer wheat from new crop for exports as it is much easier to buy from farmers and sell it directly to trading companies," he added.

Subsidies gave state-run firms an edge in wheat exports over private firms, which found it hard to make a profit, he said. 

"We are getting a subsidy of US$40-50 a tonne to export wheat," he said. 

Wheat futures have given up more than 8% since hitting a four-year high of US$9.4725 a bushel in July, although it is poised for a rebound on prospects of lower global supplies next year.