India Wheat Exports Seen Climbing on Record Plunge in Rupee

India, the world’s second-largest wheat producer, may resume exports after a gap of three months as a slump in the nation’s currency to a record lowers costs for importers from South Asia to the Middle East.

Private traders may ship about 1 million metric tons by March, said Tejinder Narang, an adviser with Emmsons International Ltd. (EMSI), a New Delhi-based exporter. Sales may increase further if the government cuts the export price of grains from its stockpiles, he said.

Resumption of Indian exports may add to global supplies and pressure prices in Chicago that have fallen 27 percent in the past year on prospects for the biggest crop ever. The rupee tumbled 17 percent this year, boosting export potential of everything from rice to wheat to sugar and cotton, while increasing costs for imports of gold and crude oil. Indian wheat will compete with grain from the Black Sea region, said Vijay Iyengar, managing director of Agrocorp International Pte.

“The weak currency will make Indian wheat more competitive in the world market,” Abdolreza Abbassian, an economist at the United Nations’ Food & Agriculture Organization, said in a phone interview yesterday. “There is potential to increase exports. To export more, or to be more competitive, Indian price has to be closer to the world market.”

Indian supplies at about $260 a ton free-on-board basis could compete with those from Russia and Ukraine, Emmsons’ Narang said. Egypt, the world’s biggest importer, bought 295,000 tons of wheat yesterday at prices from $250.44 a ton and $254 a ton, said Mamdouh Abdel Fattah, vice chairman of the state-run General Authority for Supply Commodities.

New Contracts

Wheat for December delivery fell 0.5 percent to $6.56 a bushel on the Chicago Board of Trade at 5:43 p.m. in Mumbai. Futures are heading for a 1.1 percent this month. Global output is expected to rise 6.8 percent to a record 704 million tons this year, according to the Rome-based Food & Agriculture Organization.

Private companies may start signing new contracts for exports to India’s neighboring countries, Indonesia and the Middle East, Agrocorp’s Iyengar said. Sales from state reserves may fail as the minimum price of $300 a ton was more than the current global prices, he said. Shipments came to a halt since June after a rally in local prices shunned foreign buyers.

“It makes sense for the government to reduce the price to reflect the current exchange rate to increase exports and reduce stocks,” Singapore-based Iyengar said in a phone interview yesterday. “Their rupee balance sheet will be same even if they cut the price. There will be no loss from exports.”

Rupee Loss

The rupee is the worst performer after Brazil’s real among 24 major emerging economies in the past six months on concern that foreign capital outflows will accelerate as the U.S. Federal Reserve prepares to trim monetary stimulus. The currency tumbled to an unprecedented 68.8450 yesterday and is headed for the worst annual loss since a balance of payments crisis in 1991 forced the nation to pawn gold to pay for imports.

State stockpiles of wheat totaled 40.4 million tons at the start of this month, according to the Food Corp. of India. The government buys about 30 percent of rice and wheat output from farmers at prices set by the state.

Shipments totaled 2.4 million tons since April 1, according to government data. The country exported a record 5.3 million tons in 2012-2013, official data showed.

To contact the reporters on this story: Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net; Pratik Parija in New Delhi at pparija@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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