The government’s latest proposal to export another 1.5 million tonnes of wheat from state warehouses over and above the already allowed two million tonnes export could fetch it a good price, as wheat rates in the global markets are expected to stay at around $300 a tonne (Rs 16,683 per metric tonne) till March, 2013.
Prices are expected to stay stable because of low supplies from the United States, the world’s biggest exporter, and also from Australia, Ukraine, Russia and Argentina because of poor weather.
“Global wheat prices are not expected to drop below $300 per tonne (FoB, Kandla) in the next few months and hence, India should export more quantities of the grain but in tranches as pumping all the surplus into the international markets would pull down prices,” a trader with a leading international trading firm said. He said India’s latest wheat sale could easily fetch around $320 per tonne (around Rs 18,000 a tonne) in the international markets as globally there is a shortage of wheat.
Sitting on a stock pile of over 40 million tonnes of wheat as on November 1, almost three times more than the required quantity, government should immediately liquidate around five to seven million tonnes of wheat in tranches in the next few months to take advantage of the favourable market conditions, experts said. This would considerably help in not only reducing the excess inventories but also compensate for the additional carrying cost.
Officials said the current economic cost of wheat stored in government warehouses is around Rs 19,000 per tonne, which also includes taxes paid, while the price it is expected to get by selling wheat is around Rs 17,000 per tonne. “The ideal way would be to keep on exporting 1.5-2 million tonnes of wheat in small lots or else international markets would crash, if India, or for that matter any other country, floods the international markets with wheat,” the trader said.
In August, when India floated its first tender to export wheat from the central stocks, the international market was weak at around $296 per tonne. But since then, prices have firmed up and are now hovering at around $320 per tonnes.
Two state-run trading companies — unlisted PEC Ltd and State Trading Corporation of India — got the highest bids at $324 a tonne and $322.22 a tonne, respectively, in their latest export tenders. Till date, of the earlier allocated two million tonnes of wheat export from the central pool, government has managed to allot tenders for 1.8 million tonnes, of which almost one million tonnes have already been shipped out of the country.
“Barring the first tender, all other export tenders have fetched a price which is over $300 per tonne, which is a good enough rate, but now it has become more lucrative,” the trader said.
The country produced a record 93.9 million tonnes of wheat in the 2011-12 crop year (July-June), almost 8.09 per cent more than in the previous year. Apart from FCI, traders have also shipped over three million tonnes of the grain since September 2011.
Junagadh Agriculture University (JAU) has estimated 33 per cent lower cotton production for Gujarat as compared to last year.