The government would soon consider allowing exports of 1.5 million tonnes of more wheat from the official pool, on top of the 2 million tonnes approved in July, so that the process of offloading stocks will not be halted, these sources said.
What has now bolstered expectations of the government, which had approved an estimated export subsidy of Rs 1,263 crore in July to cut overflowing inventory, is that global prices have surged by around 34% since June. Global prices are now significantly higher than the usually more-expensive Indian wheat, thanks to the worst drought in 56 years in Midwest farm belt of the US, and dry spells in parts of other key exporters such as Russia, Ukraine and Australia.
The US department of agriculture recently forecast that global wheat stocks would decline by 13% by the end of 2012-13 from a year ago to post the lowest closing stocks in four years. The International Grains Council also trimmed its forecast for total grain stocks at the end of the 2012-13 season by 4 million tonnes to 328 million tonnes, representing a fall of 12% from a year earlier. This means global prices are unlikely to slump any time soon, providing the much-needed export opportunity to India.
The Indian government is facing a storage crisis as official stocks of wheat and rice swelled to 69.52 million tonnes as of November 1, more than three times the buffer and strategic requirements and compared with the covered storage capacity of 45 million tonnes.
India, the world's second-largest wheat grower, produced a record 93.90 million tonnes of wheat in the crop year through June, leading to an all-time high procurement of around 38 million tonnes of the grain and an overflowing inventory.
"We are keen to offload some surplus stocks, but we are also mindful that we get good deals. That's why trading agencies may float tenders regularly for exports in relatively small volumes. Moreover, the monsoon season is over and there is no strong threat to stocks kept under tarpaulin from rains," said one of the officials. The government also intends to keep buyers guessing about the potential export volume in 2012-13 so that global prices don't slump reacting to it, he said.
In the latest tender for exports of 150,000 tonnes, opened late on Monday, STC received the highest bid at $322.22 per tonne from Singapore-based Concordia, while PEC received highest bid at $324 a tonne, trade sources said. The prices are much higher than the floor price of $228 per tonne for exports the government had set in July to offer subsidy. Similarly, another tender by MMTC for export of 50,000 tonnes of wheat, which opened on Tuesday, got the highest bid at $322.13 a tonne, they added.
With these, nearly 1.5 million tonnes of wheat have been contracted for exports from official reserves since July, of which around 800,000 tonnes have been shipped out, the sources said.
US wheat futures scaled their highest in almost two weeks on Tuesday after the USDA said on Monday that the condition of the winter wheat crop affected by rough weather fell to an all-time low for late November. December wheat on the Chicago Board of Trade gained 0.9% to $8.56-3/4 per bushel after hitting a session high of $8.57-3/4 a bushel, its highest since November 14.
* MMTC got highest bid at $322.13 a tonne for exports while PEC and STC got bids at $324 and $322.22 a tonne, respectively
* Nearly 1.5 million tonnes have been contracted for exports from official reserves and 800,000 tonnes have been shipped out
* EGoM to consider allowing 1.5 million tonnes more for exports from central reserves, on top of the 2 million tonnes already approved
* Officials hope no subsidy has to be offered as global prices may soar or stay at elevated levels on rough weather in the US and Russia