First tender for wheat exports next week

Written by fe Bureau | New Delhi | Updated: Sep 29 2013, 02:13am hrs
The first tender for wheat export from Food Corporation of India (FCI) stock in the current fiscal will be opened next week and will influence the key foodgrain's price in the global market.

Initially, state-owned trading firms such as MMTC, PEC and STC floated tenders for exports of 1.5 lakh tonne of wheat from Mudra (60,000 tonne), Kandla (40,000 tonne) and Kakinada ports. An FCI official said tenders are likely to be opened on October 4.

Food ministry sources told FE that higher base price of $300 per tonne for the wheat exports may not attract global buyers as higher wheat output this year in key exporting countries such as Russia, Australia, Canada and France has pulled down the the global wheat price to around $260-$270 per tonne from $310-$330 per tonne last year.

Experts say the government must reduce the base price of wheat to a realistic level of $260-$270 per tonne for attracting global demand.

While the excess wheat stock is sold under open market sale scheme to private traders in the domestic market at a price of around $242 per tonne (R1,500 per quintal), we could have kept the base price for exports at around $260 or $270 per tonne, a food ministry official said.

After getting an encouraging response from the wheat shipment last fiscal, the Cabinet Committee on Economic Affairs had last month approved 2 million tonne (mt) of wheat exports from the FCI stock. The wheat would be exported through state-owned trading firms such as MMTC, PEC and STC.

Last year, due to global shortage, the FCI had exported 4.5 mt of wheat and realised R7,000 crore at an average price of about $310 per tonne.

Our exports realisation can't match last year's level because of the sharp rise in global wheat output this year, a commerce ministry official said.

Major destinations for Indian wheat last fiscal were South Korea, Ethiopia, Bangladesh, Yemen, Thailand and Indonesia. More than 1 mt of wheat was exported to South Korea.

The FCI is moving ahead with the wheat export plan as the corporation had wheat stock in excess of 38 mt at the start of the month against strategic reserve and buffer stock norms of 20 mt.

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 because of geographical location, an FCI official said.

Meanwhile, the US department of agriculture said in a statement that global production for 2013-14 is up 7.6 mt this month to 705.4 mt as increases for the EU as well as smaller increases for Canada, India, and Turkey.

It also said: India's exports potential is also lowered as relatively high internal prices limit export opportunities.