India, the world’s second-biggest consumer of wheat and rice, approved sale of the grains from state inventories to curb a rally in domestic prices, Food Minister K.V. Thomas said. Wheat futures in Mumbai fell.
The government will sell 10 million metric tons of wheat and 500,000 tons of rice, Thomas told reporters in New Delhi today after a cabinet meeting. Export plans were not discussed at the meeting, he said. The food ministry will soon send a separate proposal to the cabinet to export 2 million tons of wheat through state-run trading companies at a minimum price of $300 a ton, he said.
Futures in Mumbai rallied 14 percent since the start of April, compared with a 6.2 percent increase in prices in Chicago during the same period. India may not be able to export at higher prices as wheat from the Black Sea region is cheaper.
Wheat from Russia and Ukraine costs $260 to $270 a ton, said Tejinder Narang, an adviser with Emmsons International Ltd., a New Delhi-based trader. The highest bid for State Trading Corp.’s 100,000-ton wheat tender, which was opened yesterday, was for $300.40 a ton, while two other bidders quoted less than $300, he said.
Wheat futures for delivery in July on the National Commodity & Derivatives Exchange Ltd. were at 1,573 rupees per 100 kilograms (220 pounds) at 1:55 p.m. in Mumbai, down from as high as 1,594 rupees earlier. The September-delivery contract fell 0.4 percent to $7.05 a bushel on the Chicago Board of Trade.
The government will sell 8.5 million tons of wheat to bulk buyers including biscuit and bread makers at a base price of 15,000 rupees ($252.59) a ton, Thomas said. Traders will have to bid for the wheat, he said. The remaining 1.5 million tons will be offered to state governments, small traders and cooperatives at the base price, he said.
The cabinet may next week consider a plan to sell 7.5 million tons of wheat and rice to the poor at subsidized rates, he said.