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India to export over 2 mt wheat next two months

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NEW DELHI : India has signed deals to export over two million tonnes (mt) of wheat during December-January as the foodgrain is being offered at an attractive price in South-East, South and West Asia amidst tight global supplies, according to trade sources.

“Wheat exports are doing well. Currently, we have orders to export 2-2.5 mt of wheat at hand during December-January. We should be exporting over 4 mt for the current fiscal,” said Rajnikant Rai, Divisional Chief Executive, ITC Agri-Business.

Current prices

The Foreign Agricultural Service (FAS) of US Department of Agriculture (USDA), in its latest “Grain: World Market and Trade”, raised its projections for India’s wheat exports to 5.25 mt from 4.5 mt earlier as it finds New Delhi prices competitive in nearby markets.

“Exports are currently being contracted at $325 a tonne free-on-board (FOB) against $265 when we started shipping earlier this fiscal,” said Rai.

USDA said India’s export prices in August averaged $265 and enjoyed an advantage of lower freight rates to neighbouring countries. Indian wheat is currently being shipped to Bangladesh, Sri Lanka, Indonesia, the Philippines, Malaysia, and West Asia. Wheat is also exported to Nepal by road.

Wheat from Black Sea, originating from Ukraine and other erstwhile Soviet Union members, is currently quoted at $358.50 for delivery in January. According to the International Grains Council (IGC), Argentine wheat is offered at $314. IGC’s wheat sub-index has surged to a 52-week high of 308, up 46 per cent year-on-year.

H1 shipments soar

According to Agricultural and Processed Food Products Export Development Authority (APEDA) data, wheat exports in the first half of the fiscal surged to 2.34 mt valued at ₹4,590 crore against 0.4mt valued at ₹812 crore during the year-ago period. Bangladesh is the biggest buyer so far purchasing 1.54 mt, followed by Nepal and Sri Lanka (both 0.18 mt).

The export orders have helped wheat prices rise to near the minimum support price (MSP) level of ₹1,975 a quintal for the 2020-21 rabi season. Prices in Uttar Pradesh and Madhya Pradesh are ruling around ₹1,950.

Mukesh Singh, Director, MuBala Agro Commodities Pvt Ltd, said some exporters, including him, are off the export market since there was no parity after domestic prices increased.

“We export on a thin margin. Bangladesh buyers are smart and bargain. On the other hand, transport charges have been raised marginally here. But exporters have begun to source wheat from Uttar Pradesh,” he said.

Exports to Bangladesh are made by road mostly. Currently, over 90 truckloads of wheat enter the neighbouring country from the Ghojadanga land border. Wheat consignments make up a third of total vehicles crossing over from India.

OMMS to millers’ rescue

Domestic flour millers have expressed concern over wheat exports but a South India-based miller said they were meeting their requirements by purchasing the foodgrain from the Food Corporation of India (FCI) through the open market sale scheme (OMSS).

Under OMSS, FCI offers wheat produced last year and this year at specified prices depending on specifications to millers and small traders. This is part of its strategy to cut its inventories. As on November 1, FCI had 41.98 mt of wheat against the Centre’s mandatory norm to carry 17.5 mt of operational stocks and 3 mt of strategic reserve.

The USDA said Indian wheat stocks, which have moved in the opposite direction when global stocks have dropped, make up 10 per cent of total stocks across the world. “With larger crops and government procurement, India wheat stocks have ballooned well above desired buffer stock levels,” it said.

Record crop

According to the Agriculture Ministry’s fourth advanced estimate, India produced a record 109.52 mt of wheat this year against 107.86 mt last year.

“FCI procured 43 mt of wheat from growers. Due to this, we don’t find any other source than the Food Corporation to meet our requirements,” said MK Dattaraj, Director of Bengaluru-based Krishna Flour Mills.

ITC’s Rai said exports will continue at a good pace since wheat prices have surged sharply in the global market.

USDA forecast India’s wheat exports to be almost 50 per cent higher than last year and the highest since 2013-14. According to APEDA data, last fiscal, India exported 2.08 mt of wheat valued at ₹4,037 crore. In 2013-14, India shipped 5.56 mt of wheat valued at ₹9,261 crore.

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