India, currently a major wheat supplier in the global market, could gain from the firm trend in prices of cereal, driven by concerns over severe freezing conditions affecting US crop and large purchases by African countries.
India had set a minimum export price of US$260 a tonne but has received higher quotes from global buyers for tenders floated recently. So far, about nine lakh (1 lakh=100,000) tonnes of wheat have been tendered for sale, but sales of about six lakh tones have been finalised.
The Indian government has planned to export about 20 lakh tonnes to create storage space for the new crop expected to arrive in April. On December 1, India's wheat stocks stood at 31 million tonnes, almost thrice the buffer and strategic reserves to be maintained statutorily.
The firm trend in global prices is also aided by the aggressive buying from African nations such as Egypt and Algeria last week. Egypt has bought 5.35 lakh tonnes from Ukraine, Russia and France at an average price of US$317/tonne. Algeria has bought about five lakh tonnes, while Syria has bought about two lakh tonnes.
Wheat futures, which rallied to a two week high on the Chicago Board of Trade on concerns of crops damage in the US winter crop, eased a bit on signs of slack demand.
Wheat acreage in the current rabi season has touched a record 302 lakh hectares, raising expectation of a bumper harvest of over 95 million tonnes. Prevailing cold conditions across the wheat growing regions of North India are reportedly supporting the growth of crops.