August 30, 2013
Following a slump in the nation's currency to a record and lowers costs for importers from South Asia to the Middle East, India may resume exports after a gap of three months.
Private traders may ship about one million tonnes by March, said Tejinder Narang, an adviser with Emmsons International Ltd. (EMSI), a New Delhi-based exporter. Sales may increase further if the government cuts the export price of grains from its stockpiles, he said.
Resumption of Indian exports may add to global supplies and pressure prices in Chicago that have fallen 27% in the past year on prospects for the biggest crop ever. The rupee tumbled 17% this year, boosting export potential of everything from rice to wheat to sugar and cotton, while increasing costs for imports of gold and crude oil. Indian wheat will compete with grain from the Black Sea region, said Vijay Iyengar, managing director of Agrocorp International Pte.
"The weak currency will make Indian wheat more competitive in the world market," Abdolreza Abbassian, an economist at the United Nations' Food & Agriculture Organization, said in a phone interview. "There is potential to increase exports. To export more, or to be more competitive, Indian price has to be closer to the world market."
Indian supplies at about US$260/tonne free-on-board basis could compete with those from Russia and Ukraine, Emmsons' Narang said. Egypt, the world's biggest importer, bought 295,000 tonnes of wheat Wednesday (Aug 28) at prices from US$250.44/tonne and US$254/tonne, said Mamdouh Abdel Fattah, vice chairman of the state-run General Authority for Supply Commodities.
Wheat for December delivery fell 0.5% to US$6.56/bushel on the Chicago Board of Trade at 5:43 p.m. in Mumbai. Futures are heading for a 1.1% this month. Global output is expected to rise 6.8% to a record 704 million tonnes this year, according to the Rome-based Food & Agriculture Organization.
Private companies may start signing new contracts for exports to India's neighbouring countries, Indonesia and the Middle East, Agrocorp's Iyengar said. Sales from state reserves may fail as the minimum price of US$300/tonne was more than the current global prices, he said. Shipments came to a halt since June after a rally in local prices shunned foreign buyers.
The rupee is the worst performer after Brazil's real among 24 major emerging economies in the past six months on concern that foreign capital outflows will accelerate as the US Federal Reserve prepares to trim monetary stimulus. The currency tumbled to an unprecedented 68.8450 Wednesday (Aug 28) and is headed for the worst annual loss since a balance of payments crisis in 1991 forced the nation to pawn gold to pay for imports.
State stockpiles of wheat totalled 40.4 million tonnes at the start of this month, according to the Food Corp. of India. The government buys about 30% of rice and wheat output from farmers at prices set by the state. Shipments totalled 2.4 million tonnes since April 1, according to government data. The country exported a record 5.3 million tonnes in 2012-13, official data showed.