February 21, 2007

India government to sell 365,000 tonnes wheat in domestic market

India's federal government Tuesday said it would sell 365,000 tonnes of wheat by Mar 31 on the domestic market to keep inflation in check.

The sales will be made through provincial governments at a fixed price of 9,860.60 rupees/tonne (US$223.54/tonne).

Government data released Friday showed India's inflation rate accelerated to a two-year high of 6.73 percent in the week to Feb 3, from 6.58 percent the previous week, mainly due to higher food prices.

Earlier Tuesday, Agriculture Minister Sharad Pawar said the condition of the standing wheat crop in the fields was "extremely good" and output in 2007 may exceed 72.5 million tonnes.

Monday, he said the government had no immediate plans to import wheat.

Government wheat stocks as of Feb 1 are estimated at 6.19 million tonnes, up from 4.87 million tonnes a year earlier. The rise in stocks is attributed to imports of 5.5 million tonnes in 2006.

"If the current weather persists and wheat output exceeds 72.5 million tonnes, I will allow exports," Pawar told reporters Wednesday on the sidelines of an agriculture conference.

India banned wheat exports earlier this month to keep a check on domestic prices.