India's Wheat Exports Limited by High Domestic Prices

India wheat exports down in fiscal year

In the midst of high local prices, projections are it will limit India's wheat and wheat product exports in the fiscal year ending March 2010, although the country has eased an earlier ban on exports this month to allow limited shipments.

On July 3, the federal government allowed three state-run firms - MMTC, STC and PEC - to export 300,000 tons each of wheat by March 31, 2010. In addition, private companies were allowed to export another 650,000 tons in wheat products, also by the same date.

But that is unlikely to lead to a surge exports.

"International prices are around $195 to $198/ton and Indian wheat costs around $232/ton," said Veena Sharma, secretary of Roller Flour Millers Federation (RFMF) of India.

She said exports are feasible only if international prices rise in the coming months.

"Unless there is a government subsidy of $30-$40/ton, (wheat exports are) not feasible," said Ajay Goyal, president of Maharashtra Roller Flour Millers Association (MRFMA).

However, the formal government order allowing the exports made it clear that "no subsidy will be given" to exporters.

India's federal government had imposed a ban on exports of wheat and wheat products in December 2007 to help curb inflation.

Since then, domestic wheat stocks have reached comfortable levels following two bumper crops and on carryover stocks from previous imports.

Even if some exports take place now, those could mainly be to neighboring countries, traders said.

"We may have to look to export to countries like Bangladesh, Nepal, Bhutan and Maldives to save on freight costs," said a state-run trading firm official, who did not want to be identified.

However, industry officials ruled out the possibility of wheat exports to Pakistan because there is no supply shortage there.

Meanwhile, state procurement of wheat has been on the rise following higher support prices.

Farmers sold more wheat to government agencies, rather than to private companies, as the state-fixed price of 10,800 rupees ($223)/ton was attractive, and relatively higher than even global prices, traders said.

Latest government data showed local wheat purchases by government agencies have already touched a record 25.06 million tons since purchases started in April, and more was trickling into state granaries.

In its annual budget announcement Monday, the government said it would step up subsidized sale of grains to poor consumers in the coming months.

With the chance of wheat exports looking slim, industry officials were more hopeful about exports of wheat products such as flour and semolina.

"Although there is not so much of demand for wheat products in the global market now, there could be some demand coming from the Middle East," said A N Gupta, chairman of Wheat Products Promotion Society of India.

He said demand for value-added wheat products from India is likely to be much more than the demand for the grain itself in global markets.

India wheat exports down in fiscal year

U.S. Could Land Some Wheat Export Business from Brazil

There are some things that would have to be overcome in order for Brazil to import some U.S. wheat this year; something that has become rare since the agreement between several South American countries to sell grain between countries with no duty attached to the deals.

While Argentina usually supplies the bulk of wheat to Brazil, this year their production has fallen drastically from last year's 16 million tons to only 10.1 million this year. Of that, last year 10.5 million tons were exported to Brazil, and this year projections are for only 5.8 million tons to be available.

The major disruptions causing the lackluster production for Argentina has been dry weather and less acreage planted in wheat.

A key factor the attractiveness of exporting to Brazil for the U.S. is if Brazil drops its import tax. The U.S. is able to send a high quality wheat with low freight charges, giving them an advantage over its competitors.

If that doesn't happen, U.S. wheat exports don't look too good.

With India making over 2 million extra tons of wheat available for export in their region, and Russia winning North Africa and Middle East contracts, it makes it harder for the U.S. to compete, as there's an abundance of wheat available because of the record crop this year.

The USDA is once again expected to drop its wheat export estimates over the next several months.

Wheat Drops to Lowest Level in Three Weeks

The price of wheat in the U.S. fell to its lowest level in three weeks as traders aren't optimistic about the comming Department of Agriculture report on export sales data.

Expectations are the global crop will dampen the demand for American wheat, as production has increased in emerging countries.

Wheat that was inspected for export from the U.S. came in at about 13.2 million bushels for the week ending October 30, a drop of about 40 percent from the week ending October 23.

India is especially making an impact on exports this year, as it announced it will probably make about 2 million tons available on the export market. India could end up with a record wheat crop this year of 78.5 million tons.

Worldwide wheat production through June 30 is projected to leap by 12 percent to a record 683 million metric tons. That's the equivalent of about 25.1 billion bushels.

Wheat for December delivery dropped to $5.372 a bushel today on the Chicago Board of Trade.

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