Global wheat prices up but India may not be able to encash immediately

From govt stocks, there is unlikely to be any move towards floating tenders to export wheat in the next few months

It seems unlikely that Indian wheat would be able to take quick advantage of the sudden rise in global prices over the past fortnight.

Officials said export could be remunerative only if the cost at ports in Gujarat was around Rs 15,500 ($252) a tonne. However, to get wheat at this price is extremely difficult from northern India, the main growing region. For, a Minimum Support Price of Rs 14,500 a tonne, plus the transport charge, makes it unremunerative.

“It is only Gujarat-based traders with some stock left or able to procure locally who can get some price in the international market. For the others, it is a no-show at present,” a senior official from a global grain trading entity told Business Standard.

He said if one tried hard, private traders could, at best, export 100,000-150,000 tonnes in the next two to three months.

The global price had jumped to around $280 a tonne since January 1, before settling at $260-265 a tonne, due to a 15 per cent export tax to be imposed by Russia, a bulk exporter, from February 1. This opens the door for export from countries like India, which have big stocks.

However, Devendra Vora, partner at Friendship Traders, a Navi Mumbai-based entity, said: “From March till August, when local prices would have moderated on expectation of a bumper crop and limited procurement by the government, as last year will make more wheat available for exports, we see a potential to export 2.5-3 million tonnes by private trade.”

From government stocks, there is unlikely to be any move towards floating tenders for export in the next few months, officials said. India’s latest wheat export from government stocks was in the first quarter of 2014-15.

“We need to liquidate around five mt of stocks in the open market by March, of which 2.5 mt has already been disposed. Our priority would be to sell the remaining available quota in the domestic market, rather than export,” said a senior official from government-owned Food Corporation of India.

He said there was no indication from the central food ministry on a restart of wheat export.

Foodgrain stocks in state-run warehouses on January 1 were estimated at 36.85 mt, against a requirement of 25 mt. Wheat was 25.1 mt, as against a 11.2 mt requirement; rice stocks were 11.7 mt as against a need for 13.8 mt (there is a further 16.9 mt of unmilled rice).

“Wheat stocks are more than the requirement but the next crop will come only around April and it is only then that we can expect some forward movement on export,” said another official.

Indian traders have exported around three mt of wheat in 2014-15, of which around one mt was through the land route to Bangladesh; the rest was to other countries through ships. In this, the share from government warehouses was 300,000 tonnes.