September 9, 2011

 

India to permit unrestricted wheat export

 

 

India will permit two million tonnes of unrestricted wheat and rice exports each as the presence of excessive supply offer political room for overseas sales, according to a government minister on Thursday (Sep 8).

 

According to Reuters, Food Minister K.V. Thomas said, "We will stop exports once shipments reach two million tonnes."

 

He said wheat has no floor price for exports.

 

The decision evoked a mixed response from grain traders as cheaper Indian rice is likely to find a ready market in South Asia, the Middle East and Africa, but global wheat prices are lower than Indian prices.

 

"India will find it difficult to find buyers for its wheat but Bangladesh can buy up to 500,000 tonnes," said a director at trading firm K.S. Commodities.

 

US wheat futures fell for the second straight day on Thursday after news indicate that major exporters Canada had bigger stocks than expected.

 

Prices were also pressured by an improved weather outlook in Australia, another big wheat supplier.

 

CBOT benchmark December wheat shed 0.37% to US$7.495 a bushel by 1153 GMT, which followed a drop of more than 1% on Wednesday (Sep 7).

 

India stopped wheat exports in 2007 and extended the ban to common rice a year later to ensure domestic supplies and keep prices under check.

 

Earlier Trade Minister Anand Sharma had said there would be no quantitative restrictions on grain exports.

 

India's August 1 wheat stocks stood at 35.87 million tonnes, substantially higher than a target of 17.1 million tonnes set for the July-September quarter.