India to exports 2mn tonnes of rice, wheat

NEW DELHI: India will allow unrestricted exports of two million tonnes each of wheat and common rice, a government minister said on Thursday, as bulging stocks offer political room for overseas sales.

"We will stop exports once shipments reach 2 million tonnes each," Food Minister K.V. Thomas said after a meeting of a ministerial panel. He said there will be no minimum export price for rice.

Wheat has no floor price for exports.

The decision evoked a mixed response from grain traders as cheaper Indian rice is likely to find a ready market in South Asia, the Middle East and Africa, but global wheat prices are lower than Indian prices.

Traders said Indian rice could be around $75 a tonne cheaper than supplies from some of the Southeast Asian countries. Thailand's benchmark 100 percent B grade white rice reached $640 a tonne on Thursday, the highest offered since Oct. 2008.

"India will find it difficult to find buyers for its wheat but Bangladesh can buy up to 500,000 tonnes," said Mohan Narang, director at trading firm K.S. Commodities.

US wheat futures fell for the second straight day on Thursday after news major exporters Canada had bigger stocks than expected.

Prices were also pressured by an improved weather outlook in Australia, another big wheat supplier.

Chicago Board of Trade benchmark December wheat shed 0.37 percent to $7.49? a bushel by 1153 GMT, which followed a drop of more than 1 percent on Wednesday.

India stopped wheat exports in 2007 and extended the ban to common rice a year later to ensure domestic supplies and keep prices under check.

Thomas said the panel also agreed there to continue with a 7.5 percent import duty on refined edible oil, while keeping crude edible oil imports free.

Earlier Trade Minister Anand Sharma had said there would be no quantitative restrictions on grain exports.

India's Aug. 1 wheat stocks stood at 35.87 million tonnes, substantially higher than a target of 17.1 million tonnes set for the July-September quarter.

Rice stocks at government warehouses stood at 25.27 million tonnes against a target of 9.8 million tonnes on Aug. 1.

Thomas said the ministerial panel banned exports of onion following a steep rise in the vegetable's price. Onion is a staple in many Indian dishes and its rise in price has even led to election defeats for government in the past.

"We will be reviewing the ban on onion every fortnight," he said.

Copyright Reuters, 2011