June 8, 2012

India is eyeing to sell 98,000 tonnes of wheat to Glencore International for export, as the country is targeting to slash its record state stocks, according to two government officials.

The cabinet is set to allow the State Trading Corp (STC) next week to sell 38,000 tonnes at US$230 a tonne and 60,000 tonnes at US$228 a tonne, said the officials, who declined to be identified because the plan is private. The price is less than the INR18,220 (US$328) a tonne cost to the government of buying and storing the grain, they said.

India is seeking to cut reserves held by the state-owned Food Corporation of India (FCI) to create room for a sixth year of record harvests. Production will be 90.2 million tonnes in the year ending June 30, the Agriculture Ministry said. The country scrapped a four-year ban on exports by private traders in September.

"Global prices are expected to plunge with exports from India and commencement of Russia's new crop from July," said T P S Narang, an adviser at the New Delhi-based Emmsons International, a grain exporter.

Wheat for July delivery rose 0.8% to US$6.18 a bushel on the CBOT by 4:55 pm Mumbai time. Futures have fallen 16% since September 8, when India ended the ban on shipments.

N C Joshi, a spokesman for the Food Ministry here, and Pravin Dongre, chief executive officer of Glencore Grain India Pvt, declined to comment.