India rushes to export more of its vast wheat stock before rot sets in

The decision might even be made as soon as Friday, following a cabinet meeting whose decision could put a small dent in the country’s swollen 44m tonne stocks.

But even as a drop in the ocean, the release would also likely dampen global prices still further if it is added to the already 4.5m tonnes offered through a successful tender scheme as traders turn their back on more expensive direct sales.

Given an unattractive floor price and the additional transport costs involved in private trade, the 5m tonnes offered to this source has seen no deals forthcoming.

No more savings​

Speaking to Reuters, food minister KV Thomas explained: "We had allowed exports of 4.5m tonnes and almost the entire quantity has been shipped out, and now we are considering allowing another 2m tonnes with same floor price of $300 per tonne​."

India's wheat stocks have been built up to back welfare programmes to give cheap food to the poor, and as the monsoon begins, the vast quantity in storage is at great risk to rain as well as rodent damage.

Three state-owned companies have sold the grain via tenders – with the last round offering a total 290,000 tonnes this week – and will also be charged with selling the extra 2m tonnes, should it go ahead.

Sagging prices​

World wheat prices are currently trading not far above their lowest point this year at areound US$6.85 per bushel, and while most of India’s wheat goes to Middle East and African buyers – being low in quality and protein, it is used to make flat breads – such a sizeable extra release would have a significant impact on the market.

The cabinet will also consider selling 10m tonnes of wheat to the domestic bulk buyers and to states for distribution to the poor, Thomas said. This would be priced at Rs15,000 (US$250) per tonne, down from $300 for a previous sale of 6.5 million tonnes.

However, the food minister dashed any hopes the export floor would be lowered. "We have been successful in exporting about 4.5 million tonnes of wheat despite the fact that our wheat is slightly expensive. This shows that our wheat is gradually gaining acceptance globally​.

"We have been able to convince foreign buyers that our wheat is fit for human consumption​.”