India missed a “Golden opportunity” for its export of extra wheat

Traders find the effort of India to export additional 5 million tonnes of wheat directly to private owners at really high price a discouraging step against stocking so much of extra stock and making space for the new crop. Traders find there to be less enthusiasm regarding the supplies as there seem to be no guarantees for the shipment at the congested ports and country’s railway.

Adviser at New Delhi-based trading company Emmsons International, Tejinder Narang said “The government has missed a golden opportunity by not allowing private trade to export earlier as the base price mechanism is unlikely to work in a bearish market”.

India is the world’s second-biggest producer and it is trying hard to reduce stocking of massive stocks after abundant harvests and is looking forward to export of 4.5 million tonnes through lengthy tenders by firms that are run by state. The expected shipment is pushed ahead to the month of June by the advent of wheat Black Sea when global prices are likely to slide.

“We have allowed these additional wheat exports for private trade for three months,” K.V. Thomas, Food Minister told reporters.

Thomas said, the added volumes might come from 2012 harvest, and it would cost around 14,800 rupees per tonne including taxes which are equal to near about $314 per tonne (FOB) free on board.

At an Indian unit of a global trading company a Mumbai-based trader said “The floor price is too high and it doesn’t make any commercial sense to export. Today, buyers can lock deals at about $260 FOB for Black Sea which will be ready for delivery in the next three to four months. Who will buy?”

Wheat prices lowered this week again as Argentina add around 5 million tonnes to the export market, it was near $300 per tonne with European benchmarks  and U.S. wheat near nine-month short. (GRA/). Indian tender that was lately made lowered to $297 per tonne. Trade is ideally to be made to Africa and Middle East where it would be used as animal feeds.

This would be such a big volume that US generally ships one third of it every year, this is sure to put a lot of strain on Indian ports and rail capacity. President of All India Grains Exporters Association, D.P. Singh said “If they are looking at large scale exports to take place in a short time, I doubt that could happen as ports are congested”.

Priority to wheat shipment was guaranteed by the government but it wasn’t visible on forthcoming Thursday for a similar treatment to the private traders.  Such a huge trade by India was done to offer grains at a cheaper rate to the poor but lack of storage capacity makes it miserable for them to store it properly and it gets damaged by pests and rains. “Today’s decision demonstrated that state-owned agencies alone can’t offload the huge stockpiles from government reserves,” said Prasoon Mathur, senior analyst with Religare Commodities.

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