November 25, 2009

 

Excess stocks to limit India wheat imports

 

 

India will not import much wheat for the time being as the country now sits on high wheat inventory amid low foreign prices.

 

The stockpile amounts to nearly three times reserve targets. The surge of imports was caused by stronger local prices, which have jumped 19 percent this year, while global supplies are 15-percent cheaper for mills in southern India.

 

Wheat stocks amounted to 28.2 million tonnes as of October 1, against a target of 11 million tonnes. Australian wheat in containers costs US$300 per tonne, including cost and freight, compared with the domestic price of US$350.

 

Industry officials said the price difference will persist for some time, and while the government will allow small import volumes, any signs of bulk purchases will prompt the government to slap on an import tariff to prevent oversupply.

 

Large imports will hurt the government's plans to raise prices for farmers to boost production, said a trader.

 

K.L. Rahman, research head at Way2Wealth, a domestic brokerage, warned that Indian wheat prices could increase further by five to 15 percent from the current level in the near future due to reports of delay in crushing.

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