India’s Wheat Exports Likely To Pick Up Only After June

India’s Wheat Exports Likely To Pick Up Only After June

India’s wheat exports will likely start in earnest around mid-year, after state-run agencies complete purchases for government inventories, as most farmers would prefer to sell their output at an attractive government-mandated minimum purchase price, a level that exporters can’t compete with, trade executives said.

Traders will likely hold back from making purchases until the government completes its stock-building program, as buying at levels near the government price would reduce the competitiveness exports on the world market, said a senior Mumbai-based trader of an international commodities trading company.

India raised the minimum purchase price for wheat by about 15% to INR1,285 per 100 kilograms (around $260 a ton) in October to increase planting interest just ahead of the sowing of crops. Meanwhile, Indian wheat is being quoted for export around $268-$270 a ton, free on board.

The government is targeting a 12.6% increase in wheat purchases, to 31.89 million metric tons during the fiscal year that starts April 1, which will likely put it on track to complete its buying by the end of June.

India has exported limited supplies of wheat since an export ban was lifted in September, as local prices have been quoted on par with or higher than international rates. Between 450,000 and 500,000 tons of wheat has been shipped from the country to date.

Most of the shipments have been to the Middle East, with a small quantity having also been shipped to neighboring Bangladesh. Around 15,000 metric tons of wheat was being loaded on to a vessel at India’s western port of Mundra for shipment to the Middle East, two senior trade executives said.

Industry officials are optimistic that supplies will be available for export on the back of a record crop forecast for the crop year that ends June 30.

M.K. Dattaraj, former president of the Roller Flour Millers Federation of India, said prices will probably fall below the minimum purchase price in the second half of the year, adding that it is “too early” to forecast the amount of wheat that will be available for export.

The government has forecast 2011-12 wheat output at a record 88.31 million tons, but officials have said the figure could exceed 90 million tons thanks to favorable weather.

Some of the country’s early wheat has started arriving in markets in the western province of Gujarat–no more than 300 tons to 400 tons daily, industry participants said.

The wheat harvest in the country’s breadbasket northern region usually begins in April.