* Minimum price too steep to attract traders
* No guarantees yet that shipments will be fast tracked
* Global prices near 9-month lows as Argentina adds exports
(Adds trader, industry comment)
By Mayank Bhardwaj and Ratnajyoti Dutta
NEW DELHI, March 7 (Reuters) - India's offer of an extra 5
million tonnes of wheat for export direct to private traders is
at too high a price, traders said, undermining its own efforts
to avoid rotting stocks and make room for the new harvest.
And with no guarantees shipments would take priority on the
country's stretched railways and at congested ports, traders
said they could see little appetite for the supplies.
"The government has missed a golden opportunity by not
allowing private trade to export earlier as the base price
mechanism is unlikely to work in a bearish market," said
Tejinder Narang, adviser at New Delhi-based trading company
The world's second-biggest producer is trying to cut massive
stocks built up after bumper harvests and has already allowed
4.5 million tonnes of exports via lengthy tenders by state-run
firms. It wanted to push shipments ahead of June, when global
prices could slide further with the arrival of Black Sea wheat.
"We have allowed these additional wheat exports for private
trade for three months," Food Minister K.V. Thomas told
The extra volumes would come from the 2012 harvest, Thomas
said, and would have a floor price of 14,800 rupees ($270) per
tonne plus taxes -- a level traders said equated to around $314
per tonne free on board (FOB).
"The floor price is too high and it doesn't make any
commercial sense to export. Today, buyers can lock deals at
about $260 FOB for Black Sea which will be ready for delivery in
the next three to four months. Who will buy?" said a
Mumbai-based trader at the Indian unit of a global trading
Wheat prices slid again this week as Argentina also put 5
million tonnes on the export market, with U.S. wheat near
nine-month lows and European benchmarks around $300 per tonne.
The latest Indian tender dipped to $297 per tonne. Sales are
mostly to the Middle East and Africa where the wheat is
primarily destined for animal feed.
Shifting such huge volumes in India -- a third of what top
exporter the United States ships in a year -- will also put a
big strain on rail and port capacity.
"If they are looking at large scale exports to take place in
a short time, I doubt that could happen as ports are congested,"
said D.P. Singh, president of All India Grains Exporters
The government had said it would prioritise its wheat
shipments but there were no guarantees forthcoming on Thursday
that exports by private traders would have similar treatment.
India has built up huge grain mountains to supply cheap food
to the poor, but lack of sufficient secure storage makes them
vulnerable to damage by rains and pests.
Rather than having to face embarrassing pictures of rotting
grain stocks again, especially in the run-up to an election next
year, the ruling Congress-led coalition government has opted for
But sales have been slow with only 3 million tonnes so far
shipped in the last year, hampered by a cumbersome tender
process run by state agencies, sliding global prices and the
country's creaking transport infrastructure.
"Today's decision demonstrated that state-owned agencies
alone can't offload the huge stockpiles from government
reserves," said Prasoon Mathur, senior analyst with Religare
Transport and railway ministers had joined the core farm,
food and finance ministers to discuss export possibilities on
"Had they done this before ... people would have got enough
time to export aggressively and the government could have got
space vacated at the godowns (warehouses) for the new crop,"
The 2013 wheat harvest gathers momentum in April and farmers
are expected to produce 92.3 million tonnes, the sixth straight
year of output surpassing domestic demand of about 76 million
tonnes. This harvest does not come under the export scheme.
"We will review the situation after three months," Thomas
(Additional reporting by Siddesh Mayenkar in MUMBAI; Writing by
Jo Winterbottom; editing by Keiron Henderson)