India's April 1 grains stocks remain high despite export push

Needs to make room for yet another bumper harvest

India managed only a marginal cut in bulging wheat stockpiles during March despite efforts to step up exports, increasing pressure on the world's No. 2 producer of the grain to find ways to boost shipments and make room for a new harvest.

Wheat stocks in government warehouses on April 1 were 24.2 million tonnes, down nearly 11 per cent from a month earlier, government sources said today.

India has so far refused to sell its wheat below Rs 14,800 per tonne but it may have to reduce that level, as global prices have fallen and it must clear space for another bumper harvest arriving soon, to protect it from rodents and rain.

New Delhi uses the stocks to distribute cheap grain to its half a billion poor people and also holds some in inventory as a buffer for emergencies.

It has offered 4.5 million tonnes of wheat via tenders, of which about 3.6 million have been contracted for exports. But its two latest tenders found no takers among private exporters, who did not wish to bid above $300 a tonne, the floor price fixed by the government.

"There has been absolutely no response in the last couple of tenders, which is like a slap to the export policy, which needs to be reviewed against the backdrop of lower global prices," said a trader with the Indian arm of a global trading company.

New Delhi has also offered another five million tonnes direct to private traders. Direct sales have failed to take off as well, and the government is now considering reducing minimum price levels, sources have said.

Traders believe the government will have to cut the floor price for both exports through state-run companies via tenders and direct sales from state warehouses to private exporters to lure back private trading companies.

The benchmark CBOT wheat contract posted on March 28 its biggest weekly decline since June 2012. It has recovered slightly since, but the contract settled Tuesday down 0.5 per cent.

India's rice inventory on April 1 was 35.5 million tonnes, almost unchanged from 35.8 million tonnes in the previous month, the sources added.

The government's inventory targets in the June quarter are 12.2 million tonnes for rice and four million tonnes for wheat. But they were set in 1999.