The union food ministry is expected to take a final call on whether or not to export wheat from the central pool after first week of February, when the situation on domestic sales becomes clearer.

Officials said that the ministry is open to exporting around 0.5-1.0 million tonne of wheat from state-run warehouses. This is to clear inventories ahead of the new procurement season that starts from April 1 and to take advantage of a benign international market. However, it  would like to first ensure that the domestic market does not have any appetite left for wheat.

“We are analysing the open market sale of wheat in the local markets as there has been a slight pick up in the last few weeks, with traders showing renewed interest, but we could also consider the option of exporting wheat if domestic sales do not push up,” a senior food ministry official said.

He said the department will prepare a formal note after the first week of February on this issue. This would be considered by a high-powered committee of secretaries, recently constituted by the government.

The Committee comprising of secretaries from the department of food, commerce and finance was constituted a few weeks back to take quick decision on liquidating foodgrain stocks from the central pool.

Foodgrains stocks in India’s state-run warehouses as on January 1, 2015 was estimated to be around 36.85 million tonne, as against the requirement of 25 million tonne, almost 47% more.

Of this, wheat stocks were estimated to be around 25.11 million tonne as against 11.22 million tonne, while rice stocks was estimated to be around 11.74 million tonne as against a requirement of 13.80 million tonne. Rice stocks do not include 16.89 million of unmilled paddy lying with the millers.

The government needs to clear space for the new wheat crop, which is expected to start arriving from April, as otherwise much of the existing crop will have to be kept in the open, leading to damage. India’s wheat output in the 2015 crop season is expected to be around 100 million tonne despite fall in acreage due to favourable weather conditions.

In April 2014, India last exported around 300,000 tonne of wheat from central stocks, but since then it has only been offloading its stocks in the domestic market as international prices were not good.

It had planned to sell around 5 million tonne of wheat in the domestic market in 2014-15, of which just around 2.5 million tonne could be offloaded due to low demand. 

Since late December, international wheat prices have risen to around $280 per tonne before settling at around $260-265 per tonne because of a proposed export tax by Russia, the world's largest exporter of wheat, and unfavourable weather in some other regions. This has raised hopes that India, which is sitting on a huge stocks of wheat, could restart its exports.

However, despite the favourable international market, private grain traders are of the opinion that high procurement cost and long transportation charges to the ports make the sales uncompetitive for them.

“For the government though, it is different as much of its cost is borne by the exchequer, but here too it will be very difficult for it to export at a loss,” a senior official from a leading international grain trading firm said.

Source:- business-standard.com