March 6 (Bloomberg) -- India, the world’s second-biggest wheat producer, may approve more exports from state reserves tomorrow amid forecasts for a near record harvest, boosting shipments to an all-time high.
A proposal to allow exports of 5 million metric tons will be considered by the cabinet, the Press Trust of India reported today, citing Agriculture Minister Sharad Pawar. The government may ship more wheat to make room in warehouses for the new crop starting from April 1, Veena Sharma, secretary of the Roller Flour Millers Federation of India, said by phone. The food ministry first proposed additional exports in January.
Record harvests expanded state wheat stockpiles by 32 percent to 31 million tons at the start of February, already forcing the government to allow shipments of 4.5 million tons by state companies since July. Exports may reach 10 million tons in the year starting April, or the equivalent of about 30 percent of shipments by the U.S., the biggest supplier, according to New Delhi-based National Centre for Agricultural Economics and Policy Research.
“The pressure on the government is to liquidate stocks before the new crop arrives,” said Tejinder Narang, an adviser with Emmsons International Ltd. in New Delhi. “As the monsoon season starts from June, they need to do something to avoid damage to the crop.”
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 a ton to $315 a ton, displacing supplies from Ukraine and Australia, said Sharma of the millers’ federation. The country is boosting shipments as prices trade near eight-month lows after crops improved globally and snow replenished U.S. soil moistures.
“If India shows rigidity in the price, buyers may shift to the U.S and Australia immediately, and to Russia and Ukraine in July-August,” Emmsons’ Narang said in a phone interview. “The price is critical for further exports.”
Futures have fallen 26 percent in Chicago since reaching a four-year high of $9.4725 in July. The contract for May delivery fell 0.4 percent to $7.03 a bushel on the Chicago Board of Trade at 3:39 p.m. in Mumbai. Prices fell to $6.975 on March 4, the lowest since June 25.
Farmers in India will harvest 92.3 million tons starting April 1, near to a record 94.9 million tons a year earlier, according to the farm ministry. The government plans to boost purchases from farmers to 44 million tons this year from 38.1 million a year earlier, the food ministry said Feb. 19.
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