India, the world’s second-biggest wheat grower, will consider cutting the export price to boost shipments from state reserves amid forecasts for a record harvest for a sixth year.
A panel of ministers headed by Agriculture Minister Sharad Pawar will review the minimum price of 14,840 rupees ($274) a metric ton that private traders need to bid for supplies from the Food Corp. of India, Food Minister K.V. Thomas told reporters in New Delhi today. The government is seeking to export 5 million tons by June 30 and the ministers may consider extending the deadline after the Food Corp. failed to get any bids to ship the grain, he said.
Exports from India have slowed after a rally in domestic prices, hampering efforts to make room in warehouses for an all-time high harvest. A decline in global prices to a nine-month low earlier this month on signs of a rebound in output from the U.S. to Australia has also cut demand for Indian grain in Southeast Asia and Africa, according to Pravin Dongre, chairman of the India Pulses & Grains Association.
“Unless India decides to export wheat at international prices, the export campaign will slowly wind down to a very negligible quantity,” said Dongre. “It’s better to export if there is not enough place to store as it’s a national loss when kept in open. It’s better to reduce your losses now than incur expenses on storage.”
Overseas sales may tumble to between 500,000 tons and 1 million tons in the year that began on April 1 from 5.3 million tons in 2012-2013 should exporters not cut prices, Dongre said. Indian wheat is $30 a ton more expensive than supplies from the Black Sea region, he said.
Wheat for July delivery climbed 0.3 percent to $7.185 a bushel at 11:53 a.m. in Mumbai today, extending a 3.5 percent advance yesterday. Futures tumbled to $6.5975 on April 1, the lowest for a most-active contract since June 20 on forecast of supplies outpacing demand.
State stockpiles in India climbed 21 percent to 24.2 million tons at the start of this month from a year earlier and more than thrice the quantity needed as buffer and emergency reserves, according to official data. The government may miss a target to buy a record 44 million tons from growers in the marketing year that began April 1 as private traders have stepped up purchases, Thomas said. State agencies may now buy about 40 million tons, he said.
Wheat has rallied 7.3 percent in Mumbai this month as exporters competed with government agencies for supplies in the market. The government increased the minimum price for the grain by 5 percent to 13,500 rupees a ton.
Production in the year ending June may exceed the 94.9 million tons harvested a year earlier, Indu Sharma, director at the state-run Directorate of Wheat Research, said April 8. The agriculture ministry predicts the crop to drop to 92.3 million tons.