(Updates prices in eighth paragraph.)
March 8 (Bloomberg) -- Wheat exports from India, the world’s second-biggest producer, may surge to an all-time high after the government approved additional shipments to make room for a near-record harvest starting next month.
A panel of ministers headed by Farm Minister Sharad Pawar authorized the export of 5 million metric tons from state reserves by private companies, Food Minister K.V. Thomas told reporters in New Delhi yesterday. That’s in addition to 4.5 million tons already approved for shipment by government-run companies since July, he said.
India’s shipments are adding to global supplies as Australia predicts a 13 percent increase in its harvest, snow replenishes soil moisture in the U.S., the biggest shipper, and Argentina eases export curbs. Sales from India may reach 10 million tons in the year from April 1, according to the New Delhi-based National Centre for Agricultural Economics and Policy Research. That, along with forecasted record rice inventories in the biggest exporters, may restrain world food costs that tumbled 12 percent from an all-time high in 2011.
“India has got four to five months for exports until the Northern Hemisphere crop comes into the market in August and September,” said Vijay Iyengar, managing director of Agrocorp International Pte., a Singapore-based trader. “Countries in Asia, Africa and the Middle East will buy Indian wheat.”
More exports by state-run trading companies may be allowed “as we want to establish our brand,” Thomas said. The government fixed a minimum price of 14,800 rupees ($272) a ton for exports and private traders need to buy the grain from 2011-2012 supplies kept in warehouses in Punjab state, he said.
“At these values private traders may find it difficult to export because international wheat market is in any case weakening,” said Atul Chaturvedi, chief executive officer of Adani Wilmar Ltd. “It will be difficult to find a home for Indian wheat.”
Exports from India may total 5 million tons in the year ending March 31, with sales mostly to Southeast Asia, the Middle East and Africa at prices ranging from $305 to $315 a ton, displacing supplies from Ukraine and Australia, said Veena Sharma, secretary of the Roller Flour Millers Federation of India. The country is boosting shipments at a time when prices are trading near eight-month lows after crops improved globally.
Futures have fallen 27 percent in Chicago since reaching a four-year high of $9.4725 a bushel in July. The contract for May delivery was at $6.955 a bushel on the Chicago Board of Trade by 5:19 p.m. Mumbai time. Prices fell to as low as $6.80 on March 6, the cheapest since June 22. The global wheat harvest may climb 4.3 percent to 690 million tons this year, the United Nations’ Food & Agriculture Organization said yesterday in a report, as European farmers expanded acreage while yields rebound in Russia.
India’s wheat production may total 92.3 million tons in the year ending June, near the record 94.9 million tons a year earlier, according to the farm ministry. State stockpiles in India expanded 27 percent to 27.1 million tons at the start of this month. The government plans to boost purchases from farmers to 44 million tons in the marketing year starting April 1 from 38.1 million a year earlier, the food ministry said Feb. 19.
--Editor: Thomas Kutty Abraham