October 26, 2012
Demand for the Indian grain could be triggered by Ukraine's move to ban wheat exports from November 15, 2012.
Wheat exporters see a potential rise in Indian shipments, though prospects for upside in pricing are limited as the market has already factored in Ukraine's move.
"The Ukraine export ban will definitely benefit us. However, it all depends on how the Australian crop, scheduled for harvest next month, shapes up," said Anil Monga, Chairman, Emmsons International Ltd, a Delhi-based exporter.
Ukraine is one of the top 10 global wheat exporters, which saw its harvest decline by a third due to drought this year. On Wednesday, Ukraine decided to stop wheat exports from November 15, a move that saw global prices firm up.
Monga suggested that the Government open up the wheat stocks to private trade and fix a price as it had done in 2002. Such a move will enable exporters to encash the potential demand arising from the current market dynamics.
"There is no reason why India should not benefit considering that we have huge stocks," said Atul Chaturvedi, Chief Executive Officer of agribusiness at Adani Group.
The fact that Indian wheat has already been accepted in the West Asian market should accelerate the exports. Wheat exports have crossed three million tonnes, a bulk of which has been by the private trade.
Government agencies have contracted about eight lakh tonnes for exports and have shipped about four lakh tonnes so far. So far, Indian exports have been to Korea, Taiwan, Yemen and neighbouring Bangladesh, Sri Lanka among others.
Though the exporters are bullish on the prospects of the Ukraine fallout, analysts are sceptical over the imminent gains. Major buyers of Ukraine wheat such as Egypt and West Asian nations have covered their requirement till December-January, said commodity analyst Tejinder Narang.
Morever, the market has already discounted the Ukraine ban and whatever upside in pricing that was anticipated, has already been attained, he said. "This is the best time to get rid of old stocks for the Government," another analyst said. Wheat stocks in the Central pool stood at 43.15 million tonnes, as on October 1, about three times higher than the 14 million tonnes of the normative buffer and strategic reserve requirements for this date.
A United Nations aid agency has purchased about 40,000 tonnes of wheat of Indian origin to be shipped to Ethiopia via Djibouti and other ports, according to European traders. The purchase is for shipment between November 25 and December 5. The UN has a range of food aid programmes underway in East Africa.
Traders said the purchase was made under new terms under which all or part of the wheat consignment can be switched to other locations if the need arises. India has been exporting wheat heavily in recent months to reduce huge stocks after a bumper crop.