A significant jump in global wheat crop this season is likely to impact Food Corporation of India (FCI) export of two million tonne of grain, if higher base price is not revised, senior government officials said.
Due to a higher wheat output in key exporting countries such as Russia, Australia, Canada and France, the global wheat price is prevailing in the range of $ 260 to $ 270 per tonne. However, India has decided to keep a base price of $300 per tonne for two million tonne (mt) of wheat export which is ‘unrealistic’ and needs revision, a senior official told FE.
Encouraged by the response from the wheat shipment last fiscal, Cabinet Committee on Economic Affairs earlier this month had approved 2 mt of wheat exports from FCI stocks. Wheat would be exported through state-owned trading firms such as MMTC, PEC and STC.
“Even if we get an average price realisation of $270 per tonne, we need to go ahead with shipment because our realisation will be similar to last year because of fall in the value of rupee against the US dollar in recent months,” an official with PEC said.
Last year, due to a global shortage, FCI had exported 4.5 mt of wheat and realised R7,000 crore at an average price of about $310 per tonne.
“Our export realisation can’t match last year level due to a sharp rise in wheat output this year,” a commerce ministry official said. Major destinations for wheat export last fiscal was to South Korea, Ethiopia, Bangladesh, Yemen, Thailand and Indonesia.
“Indian wheat has made a mark in the global market because of its quality and importing countries get a freight advantage of around $15 per tonne due to geographical location,” a PEC official noted.
Meanwhile. US department of agriculture (USDA) said, “global production for 2013-14 is up 7.6 mt this month to 705.4 mt as increases for the European Union as well as smaller increases for Canada, India, and Turkey,”
The USDA also said, “India’s exports potential are also lowered as relatively high internal prices limit export opportunities.”