Wheat exports start to shrink

After a record export of wheat over the last few months, exports have started shrinking with few vessels now loading at ports.

A source at a leading export house said wheat was currently priced at $150 free on board (FOB).

"We are seeing tough competition from south American countries as well as eastern Europe, Australia and Turkey where the season is beginning. Stocks in India are also declining and the situation is likely to be tight unless the government offers export subsidies," he said.

High prices are leading importers in neighbouring countries like Bangladesh and Sri Lanka to look beyond India for their wheat requirements.

Global demand for wheat has risen following lower production of coarse grains this year. Locally, private importers are holding on to wheat stocks procured earlier during the year and waiting for the government to announce export subsidies.

However, they may offload it in the domestic market if no government subsidy is offered.

September marked roughly the half-year mark of the marketing year from April 2004 to March 2005 and wheat exports in the period was around 1.5 million tonne.

Another 1,00,000t is expected to be exported till March 2005, taking total exports to around 1.6 million tonne.

As of September 1, government wheat stocks were at 15.8 million tonne, compared with 17.4 million metric tons in August and 20.7 million tonne as of September 2003.

Domestic offtake in the September-March lean supply period will rise, and stocks are estimated to fall to around five million tonne by April 1, 2005, the lowest level since 1997.

The government is reported to have agreed on an export subsidy of Rs 900-Rs 1000 per tonne on wheat.

However, shrinking stocks coupled with high inflation and a decline in coarse grain production may make the government change its mind and decide against export subsidy until fresh arrivals begin in April-May.

Further, the government is charting out an extensive food-for-work programme to provide rural employment, which would create further demand for wheat in the domestic market.