May 19, 2004



India Might Not Export Wheat In Near Term

At least 200,000 tonne of Indian wheat, contracted last year, is waiting to be shipped but any fresh offers are unlikely following the political change in the South Asian nation, a leading grains broker said on Tuesday.


After defeating the ruling Bharatiya Janata Party, a Congress-led Government, with the support of the Communists, is set to take power in India.


"I was speaking to Delhi this morning. The indications are that it is very unlikely the Government will offer any grain for export," said chief executive of Apoorva Agencies, PS Nathan.


"I am convinced about it."


But the old allocations, shipments of which have been delayed due to reasons such as the unavailability of cargoes and a lack of vessels, are expected to move out to mainly Asian destinations by the middle of June.


"These cargoes have been delayed for various reasons -- for issues such as the lack of some documentation. In any case, they cannot be delayed any longer," Nathan told Reuters.


But Indian wheat exporters, who had bought the grain from the new crop and were waiting for the Government to announce subsidies to resume exports, are giving up hope that will happen anytime soon.


This has unnerved Asian buyers who have been scrambling for cheaper cargoes in the absence of supplies from China and other non-traditional origins.




"We had already taken some positions. Some exporters associated with us had already bought 45,000 tonne of wheat for export but we are quite worried we might not see any subsidy on that," Nathan said.


Indian grain exports have been on hold since last August when the state-run Food Corporation of India (FCI) stopped the subsidised sale of wheat and rice to exporters due to a fall in stock levels.


Just before the election results were announced last week, FCI had said Indian traders had bought nearly half a million tonne of wheat from the new crop and were awaiting a government policy to resume exports.


"They are dead against subsidising grain exports. The maximum that can happen is that the Government might tell us to export without subsidies," Nathan said.


But with Indian wheat in the open market quoted at $175 a tonne FOB, exports without subsidies would not take place since the landed cost in most Asian nations would work out to be higher than $200 a tonne, he added.


The landed cost of Australian wheat, considered much better in quality by Asian grain importers, is around $200 a tonne C&F.


"The current equation does not give me any scope for optimism," Nathan added.

Earlier this month, some Indian traders were offering wheat from at least a three-year old crop for export to countries such as the Philippine and South Korea for May and June shipments.


India's wheat crop this year has been hit by unusually hot weather in March and heavy rains in April. The country is expecting a crop of around 73 million tonne, about three million tonne lower than earlier estimates.

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