NEW DELHI India could add another 2 million tonnes of wheat for export in a successful tender scheme as private traders shun more expensive direct sales, bringing the total offered to 6.5 million tonnes.
The decision, which could dampen global prices further and help the world's second-biggest wheat producer cut swollen stocks, may come at a cabinet meeting on Friday, Food Minister K.V. Thomas told Reuters on Wednesday.
India's wheat stocks, built up to back welfare programmes to give cheap food to the poor, hit 44 million tonnes on June 1, about a quarter of global totals. As the monsoon starts, these are more at risk to rain as well as rodent damage.
"We had allowed exports of 4.5 million tonnes and almost the entire quantity has been shipped out, and now we are considering allowing another 2 million tonnes with same floor price of $300 per tonne," Thomas said.
Three state-owned companies - PEC, State Trading Corp. and MMTC Ltd - have sold the grain via tenders, with the last round offering a total 290,000 tonnes this week. They would also sell the extra 2 million tonnes.
India has offered another 5 million tonnes of wheat direct to private traders but no deals have been done here because the floor price is considered unattractive, given the extra transportation costs.
There are also quality constraints as India's wheat is used to make flat breads, unlike the high-protein U.S. soft white wheat which Japan and South Korea prefer. Most of India's wheat goes to Middle East and African buyers.
Extra supplies could nevertheless dampen global prices further. The benchmark CBOT price continues to trade not far from 2013 lows even though worries that wet weather would delay the U.S. winter harvest have edged levels higher this week.
Chicago Board of Trade July wheat rose 0.66 percent to $6.85 a bushel by 0324 GMT, having closed little changed in the previous session.
The cabinet will also consider selling 10 million tonnes of wheat to domestic bulk buyers and to states for distribution to the poor, Thomas said. This would be priced at 15,000 rupees per tonne, down from $300 for a previous sale of 6.5 million tonnes.
But Thomas dashed any hopes the export floor would be lowered.
"We have been successful in exporting about 4.5 million tonnes of wheat despite the fact that our wheat is slightly expensive. This shows that our wheat is gradually gaining acceptance globally," Thomas said.
"We have been able to convince foreign buyers that our wheat is fit for human consumption," he added.
SUGAR TAX STEADY?
Thomas also said his ministry held that the import tax on sugar should not be increased at least until September.
Concerned over imports in a year when supply outpaced demand, sugar producers wanted a rise in import duties currently at 10 percent. India is the world's second-biggest sugar producer after Brazil.
"The agriculture minister has said that sugar import tax should be raised but the food ministry is of the view that it should not be raised until at least September," Thomas said.
"The idea is to be extra cautious about retail prices which typically go up between July and September," Thomas said.
The cabinet will also consider allowing selling an extra 500,000 tonnes of rice to state governments for subsidised sale to the poor.
(Editing by Jo Winterbottom and Muralikumar Anantharaman)
Trending On Reuters
The Reserve Bank of India (RBI) has not said it is done with interest rate cuts and will keep a close eye on incoming data, Governor Raghuram Rajan told CNBC in an interview. Read | RBI more likely to cut rates in Sept - Reuters poll