India will allow unrestricted exports of two million tonnes each of wheat and common rice, as bulging stocks offer political room for overseas sales which could depress global rice prices but make little dent in wheat supplies. "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 the Middle East and Africa, but global wheat prices are lower than Indian prices. "There will be a sentimental impact on global markets which could see this as a signal for more supplies from India which is sitting on huge stocks," said Tejinder Narang, a former director with state-owned trading firm PEC Ltd.
"There will be more impact on the rice market, and Thai and Vietnam prices will come under pressure. But the impact on wheat could be limited as our quality is of medium grade. Indian supplies could force Russia to bring down its prices." India's August 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 August 1. 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 October 2008.
"India will find it difficult to find buyers for its wheat as domestic prices are higher, 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 exporter Canada had bigger stocks than expected.
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. Prices were also pressured by an improved weather outlook in Australia, another big wheat supplier. Thomas also 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. 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.
Comments
Comments are closed for this article.