The Cabinet has decided to continue unrestricted export of wheat and non-basmati rice.
“The Cabinet Committee on Economic Affairs (CCEA) has approved the continuation of the unrestricted export of wheat and non-basmati rice, in view of the adequate availability of wheat and non-basmati rice in the domestic market. The proposal was moved by the Department of Commerce,” a statement released after the meeting said.
However, a PTI report said that the government has also approved export of an additional 2.5 million tonnes of wheat from the central pool, bringing the total of such exports to 4.5 million tonnes.
“The CCEA has approved an additional export of wheat from FCI godowns. The Cabinet did not mention any specific quantity for exports but there was an agreement to review exports once the shipments touch 25 lakh tonnes,” PTI said quoting an unnamed source.
In August, it had first approved export of two mt of wheat, for the first time in seven years. Of these, tenders have been floated for sale of about 1.8 mt, of which almost one mt has been sent out.
As on November 1, the wheat stock in the central pool is estimated at a little over 40 mt, almost three times more than the required quantity. Experts and market watchers feel India should immediately allow export, in tranches, of five to seven mt in the next few months to take advantage of favourable market conditions. “Prices in the global market are expected to stay over $300 a tonne in the next few months, providing the country a golden opportunity to liquidate its inventories are good prices,” said a leading trader.
Prices are expected to stay stable because of low supplies from America, the world’s biggest exporter, and also from Australia, Ukraine, Russia and Argentina because of poor weather. Traders said India’s latest wheat sale could easily fetch around $320 (Rs 18,000) a tonne in the international markets.
Liquidating the wheat through exports would also help compensate the government’s additional carrying cost. Officials said the current economic cost of wheat in government warehouses was around Rs 19,000 a tonne, including the taxes paid. The price the government is expected to get by selling wheat is around Rs 17,000 a tonne.
“The ideal way would be to keep on exporting 1.5-2 mt in small lots or else the international markets would crash, if India or, for that matter, any other country flood the international market,” the trader said.
In August, when India floated its first tender to export from central stocks, the international market was weak at around $296 a tonne. Now, these are around $320 a tonne. Two government-owned trading companies, unlisted PEC Ltd and State Trading Corporation of India, got the highest bids at $324 a tonne and $322.22 a tonne, respectively, in their latest export tenders.
The country produced a record 93.9 mt of wheat in the 2011-12 crop year (July-June), almost eight per cent more than the previous year. Apart from the government’s Food Corporation of India, traders have also shipped a little over three mt of the grain since September 2011.