The Centre today said it is ready to relax quality norms for procurement of wheat from farmers in view of crops being affected by the unseasonal rains and hailstorms in various parts of the country.
Unseasonal rains and hailstorms, being witnessed from February-end, have damaged rabi (winter-sown) crops in about 113 lakh hectares of area in the country. Total cultivable area in rabi season stands at 600 lakh hectares.
"We are ready to relax the quality norms for procurement of wheat and other grains to provide relief to the farmers who are affected by the recent spell of unseasonal rainfall," Food Minister Ram Vilas Paswan said.
The assurance comes in the backdrop of Congress President Sonia Gandhi writing to Paswan for relaxing the specifications for procuring foodgrains and cited "unprecedented crisis" faced by farmers due to unseasonal rainfall and hailstorms in various parts of the country.
"The Centre has asked Haryana, Rajasthan and Uttar Pradesh governments to test samples of wheat jointly with FCI immediately on its arrival so that appropriate relaxation in quality norms can be considered for the procurement," food ministry said in a statement.
Production of wheat is likely to fall by 4-5 per cent from the initial estimates of 95.76 million tonnes in 2014-15 crop year (July-June) due to unseasonal rains.
The Centre has fixed the wheat procurement target at 30.05 million tonnes during 2015-16 marketing year (April-March) as against 28 million tonnes purchased by FCI during last year.
The ministry informed that quality norms for procurement of wheat, which has lost its shine, have already been relaxed in Madhya Pradesh and Gujarat in the current Rabi season.
"After testing the samples in Madhya Pradesh, shrinked and broken grains have been allowed upto 10 percent," it added.
In view of interests of farmers, the ministry said that the government relaxes the norms for foodgrains procurement time to time. Norms were relaxed for procurement of Rice in Faylene and Hud Hud affected area also.
"Procurement quality norms are decided every year on the recommendations of a committee of experts which include Food Secretaries of States. If quality of wheat is affected due to unseasonal rains or any other reason, relaxation in the norms is considered on the recommendations of states after testing samples of wheat on its arrival," the statement said.
As per Food Safety and Standards Act, 2006 relaxation in norms is allowed in the case of broken and shrinked grains and if grains have lost shine. According to the Act grains having more than 14 percent moisture cannot be stored and procured.
Saudi Arabia bought 780,000 tonnes of hard wheat in an international tender which closed on Friday, the country's main state wheat buying agency, the Grain Silos and Flour Mills Organisation (GSFMO), said on Monday.
The wheat, with 12.5 percent protein content, is for shipment during June to August, GSFMO acting director general Abdulrahman Al Ruwaitie said in a statement.
The accepted origins are the European Union, North America, South America and Australia, at the sellers' option, the GSFMO said.
The purchase comprises 13 consignments, with a total of 540,000 tonnes in nine vessels to be shipped to the port of Jeddah and 240,000 tonnes in four vessels to Dammam, he said.
These purchases in dollars a tonne with shipment period in 2015 in brackets: Jeddah: - 60,000 tonnes bought from Noble at $230.94 C&F (June 1-10) - 60,000 tonnes bought from Glencore at $236.90 C&F (June 10-20) - 60,000 tonnes bought from Glencore at $236.90 C&F (June 20-30) - 60,000 tonnes bought from Concordia at $237.72 C&F (July 1-10) - 60,000 tonnes bought from Glencore at $237.90 C&F (July 10-20) - 60,000 tonnes bought from Concordia at $238.22 C&F (July 20-30) - 60,000 tonnes bought from Noble at $232.44 C&F (Aug. 1-10) - 60,000 tonnes bought from Noble at $233.42 C&F (Aug. 10-20) - 60,000 tonnes bought from Noble at $235.42 C&F (Aug. 20-30) Dammam: - 60,000 tonnes bought from Noble at $238.27 C&F (June 10-20) - 60,000 tonnes bought from Noble at $239.77 C&F (July 1-10) - 60,000 tonnes bought from Glencore at $239.90 C&F (July 20-30) - 60,000 tonnes bought from Glencore at $239.90 C&F (Aug. 10-20).
In its last reported purchase on Feb. 2, the GSFMO bought 690,000 tonnes of hard wheat. Saudi Arabia has become a major importer of hard and soft wheat since abandoning plans for self-sufficiency in wheat in 2008 as farming in the desert drained precious water supplies. The country plans a steady reduction in agriculture and aims to be completely reliant on imports to save water.
Egypt’s currency market reforms are inflicting a heavy toll on many private sector wheat traders struggling to secure shipments for the world’s largest wheat importer.
Last month, the central bank devalued the Egyptian pound and capped dollar deposits in banks to $50,000 a month in order to undermine the black market.
But restrictions on unofficial dollar flows were not matched by significant increases in dollars available through official channels, leading to a countrywide hard currency shortage that has hit importers particularly hard.
“Firms can no longer buy dollars on the black market and then place them in banks to open up letters of credit for import,” said Jason Tuvey, Middle East economist at Capital Economics.
Egypt imports over 10 million tonnes of wheat annually, mostly by the state. State grain buyer GASC told Reuters it had no payment delays as a result of the new regulation.
But the private sector, responsible for about 4.5 million tonnes of imports, is hurting.
“The bank lets you deposit $50,000 per month. Most of my shipments are worth $700,000. So I’m supposed to wait 14 months to pay my supplier?” asked a trader at a small wheat importer.
Traders try to circumvent banking limits by listing major shipments as dozens of small ones and securing separate financing for each. They also open accounts at several banks.
“In two months I haven’t imported any shipments because these regulations are not practical,” said Hesham Soliman, general manager of Om El Nour group, which usually imports 700,000 tonnes of wheat a year.
“It’s better to watch and wait than to put yourself in this mess.” The currency reforms are part of Egypt’s broader efforts to project an investment-friendly image ahead of an economic summit this weekend in Sharm el-Sheikh.
The bank did not respond to requests for comment.
It auctioned $420 million in an exceptional currency auction on the interbank market last week, in part to clear up backlogs of imports at Egypt’s ports. But traders say ad hoc sales fuel uncertainty.
“There’s no indication of how regular or consistent the dollar flows will be,” said a Europe-based trader waiting for his partners in Egypt to pay for pending shipments.
Traders say they can’t afford to exit such a huge market.
“It makes everyone a bit more hesitant to close deals when the financing of those deals isn’t fully transparent,” said a trader at a company that imported 100,000 tonnes of wheat to Egypt last year.
“Grains are still moving in of course. But the shortage has slowed down a process that was never too efficient to begin with.”
Japan's Ministry of Agriculture
said it would import 22,390 tonnes of feed quality wheat, and
33,070 tonnes of barley for livestock use, via a simultaneous
buy and sell (SBS) auction that closed late on Wednesday.
The ministry had sought 120,000 tonnes of feed wheat and
200,000 tonnes of feed barley to be loaded by June 30 and for
arrival in Japan by Aug. 31 in the tender that is usually
It is seeking the same amounts for each grain to be loaded
and shipped during the same period in a similar tender that will
be held on March 18.
Japan buys a small portion of feed wheat and barley via
so-called SBS auctions, in which end-users and importers specify
the origin, price and quantity of grain, allowing millers to
meet their varied needs for the feed grain.
Details of the results are below, with the quantity in
tonnes and the average price in yen per tonne:
QUANTITY AVG IMPORT PRICE AVG SELL PRICE
Feed wheat 22,390 N.A. N.A.
Feed barley 33,070 N.A. N.A.
The Government has allocated 100 Lakh MT of wheat for sale through weekly e-auctions to Bulk Consumers/Private Traders under Open Market Sale Scheme Domestic [OMSS(D)] up to 31.03.2015 (including delivery period). Against the said allotment, a quantity of 38.67 lakh tonnes of wheat has been confirmed for sale during the year 2014-15 upto 19.02.2015 at an average price Rs. 1614.40/- per Qtl. This information was given by the Minister of State for Consumer Affairs, Food and Public Distribution, Shri Raosaheb Patil Danve in a written reply in Lok Sabha today.
The Minister said that in the States of Punjab, Haryana and Madhya Pradesh, the reserve price of wheat has been kept at Rs. 1500 per quintal for wheat stock of crop-years upto 2013-14 and Rs. 1570 per quintal for wheat stock of RMS 2014-15. For depots of FCI located outside Punjab, Haryana and Madhya Pradesh, the depot wise reserve price of wheat is to be arrived by adding railway freight from Ludhiana to the nearest railhead and road transportation cost from such railhead to the depot, to the crop year-wise reserve price for Punjab/Haryana/MP.
He said that price of Wheat sold under OMSS(D) scheme is fixed by the Government taking into account the prevailing market situation, trend of inflation and need of liquidation of surplus stock available under Central Pool without distorting the market too much. Rate of wheat products is not regulated by the Government.
Japan's Ministry of Agriculture said it would import 20,000 tonnes of feed-quality wheat and 46,000 tonnes of barley for livestock use after a simultaneous buy and sell (SBS) auction that closed late on Wednesday.
The ministry had sought 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley to be loaded by May 31 and arrive in Japan by July 31.
It is seeking the same amount of each grain to be loaded and shipped during the same period in a tender that will be held on Feb. 25. It usually conducts tenders each week.
Japan buys a small portion of feed wheat and barley via so-called SBS auctions, in which end-users and importers specify the origin, price and quantity of grain, allowing millers to meet their varied needs for the feed grain.
Details of the results are below, with the quantity in tonnes and the average price in yen per tonne:
QUANTITY AVG IMPORT PRICE AVG SELL PRICE Feed wheat 20,000 N.A. N.A. Feed barley 46,000 N.A. N.A.
Egypt, which got a $100 million credit line from the U.S. to purchase American wheat, said it canceled a tender to buy the grain Wednesday because prices were too high.
The U.S. wheat offered by companies including Cargill Inc. and Bunge Ltd. was “much higher than world prices,” said Mamdouh Abdel Fattah, vice chairman of the state-run General Authority for Supply Commodities. Egypt, the world’s largest wheat importer, hasn’t bought U.S. grain though its state-run tender system since September, Bloomberg data show.
“U.S. prices are exaggerated,” Fattah said by telephone from Cairo. “We will have to think of other origins to cover market needs.”
U.S. exporters have struggled to be competitive in North African markets against cheaper supplies from Europe. The European Union had a record wheat harvest this season, leaving ample stockpiles of grain to ship, while U.S. production dropped to a three-year low, according to the U.S. Department of Agriculture. A stronger U.S. dollar also has made the grain more expensive relative to European supplies.
Offers for U.S. wheat in the canceled tender ranged from $287 to $336.46 a metric ton, according to a GASC document. That compares with an average price of $236.25 a ton for French and Romanian wheat in Egypt’s last international tender on Feb. 3.
The U.S.’s extension of a credit line to Egypt to encourage buying of American supplies also bolstered U.S. prices in the past two weeks, making the grain even less competitive, said Matt Ammermann, a commodity risk manager at INTL FCStone Inc. in Plymouth, Minnesota. Egypt doesn’t have a time limit to use the U.S. credit, Supply Minister Khaled Hanafy said in a Feb. 5 interview.
Wheat futures fell 1.6 percent to $5.2325 a bushel at 10:22 a.m. on the Chicago Board of Trade, erasing an earlier gain of as much as 1.5 percent. Milling wheat in Paris dropped 0.9 percent to 187.75 euros ($213.36) a ton on Euronext.
“We could see prices come down” after Egypt’s cancelation, Ammermann said in a telephone interview. “The U.S. is too high. France is still the cheapest in the world right now.”
Russian milling wheat—the world’s most traded wheat of 11.5-12.5% protein—has suddenly disappeared from the trading kitty of international traders in the last 15-odd days. What is the export price of Russian “milling wheat” today? Trade reports are marked N/A—not available—wherever the column of Russian wheat appears. Frankly, it carries no “price” in the US dollar or any other hard currency, except in roubles.
There are neither buyers nor sellers for Russian origin cereal. As of today, Russian wheat equals “confusion” of worst kind. CBOT futures—which reflect movements of US-SRW (soft red winter) wheat, also used as an index for price movements—have captured these developments by maximum upswing of $40 pmt or 16% in last one month.
Pursuant to a steep fall in crude oil prices and US/EU sanctions on Russia for forcible occupation of part of Ukraine’s land space, the rouble has depreciated from 35 to 60 to a dollar since July 2014. Fifteen million tonnes of wheat export from July 2014, against an estimated evacuation of 22 million tonnes this year, is proving to be super-inflationary by 82% for domestic users.
Analytically, the price spike in the dollar is merely 8% for importing entity while exporter realisation in Russia is 82%-plus in fob terms (8,400 rouble in July 2014 and about 15,340 rouble in December 2014). Local authorities are concerned about high domestic prices/inflation and plan an inventory of additional 3.5 million tonnes (existing stocks 1.5 million tonnes) even at 11-12,000 roubles pmt while in July 2014 the domestic price was 6-7,000 roubles pmt. Given the fragility of the rouble, more exports may lead to more domestic inflation. New crop to be harvested in July 2015 is under threat from winter kill, another matter of concern.
The statements to rein in wheat shipments started emanating around early December 2014 from Russia’s officialdom. The first one was that Russia will issue phytosanitary certificates only to four countries (Egypt, Turkey, India and Armenia). The rest of the world stands excluded. (Phytosanitary documentation is issued by national plant protection organisations of each exporting country, certifying that consignments meet plant health regulations of importing nation, otherwise no grain of foreign origin can enter any importing country.) Russia’s decision is discriminatory and violative of the Trade Facilitation Agreement (TFA) of the WTO concluded in November 2014. But when a country is under acrimonious sanctions, why bother? Ships are stuck at Novorossiysk port for want of these certificates. Russian exporters are complaining of railcars not being made available for transportation to ports. Non-availability of grain at the port “technically” implies shutting down exports.
And the last straw on the camel’s back notified on December 26 is the imposition of 15% duty plus euro 7.5 pmt subject to minimum of euro 35 ($43) from February 1 to June 30, 2015. This will first prompt escalation of prices of all origins and then de-escalation after four months, thus injecting hyper-speculation and volatility internationally. What will be duty component in July 2015 is another mystery.
What do these conditions mean to wheat trade? It is neither a formal prohibition on export nor restrictive or open export policy. But it is a message—do not meddle with Russian wheat for the time being. All existing contractual commitments catapult to zone of confusion or shall remain unexecuted. Nor force majeure conditions can be enforced for defaults. Contractual commitments in Russia cannot be effectively litigated. Buyers will be in a huddle either to enter into fresh commitments or negotiate with sellers for alternative origins with cheaper values or seek compensation from sellers for reneging from contracts. To what extent hedging in CBOT futures of buyers/sellers will mitigate losses can be guesstimates.
Ukraine’s wheat shipments have touched about 8 million tonnes, of the total 10 million tonnes. Russian developments have also rattled its values with high volatility from a low of $235 fob in November 2014 to $260 last week. Ukraine prices could further flare up as they tend to converge with unpredictable Russian values. Trade will touch Ukraine origin at great risk and peril. For markets in West Asia, Africa and the Far East, two origins that will start competing more aggressively will be Australia and Argentina. French wheat, though cheapest, has a problem with quality. Argentine and US consignments have high freight component of about $40-45 pmt for handymax cargos—25-40,000 metric tonnes.
FCI from India can too chip in from January to April 2015. At this point, price of $275-280 fob can be secured during January-April 2015 to ship out 3-4 million tonnes, provided speed of tendering and decision-making is accelerated. This niche opportunity is WTO-compliant at $1=63.5 and translates to R17,476 fob against OMSS of R15,500 ($246) pmt plus freight R1,000 ($16) from Madhya Pradesh to Kandla port.
This is at par or better than current domestic realisation. No subsidy issue is involved like raw sugar export proposal, where WTO’s compliance concern has cropped up.
Around April 2015, FCI will get busy with next year procurement. If export momentum and premium is sustained, private sector can take up wheat export at MSP of R14,500 pmt from April-July 15 because Russian new crops will re-enter world markets with some “unknown conditions” around July 15 again. This will also result into lesser procurement by FCI. Indian price realisation could well be near $300 pmt fob with passage of time if Russian “conditional” exports continue.
The caveat is that these Russians measures are interim executive instructions which can be reversed any time probably under pressure by exporter’s/farmer’s lobby groups on the plea of accessing hard currency. To the extent this period of uncertainty remains, Indian food and commerce ministries may formulate effective strategies to take advantage of this low-hanging fruit.
Agro-exports of items like corn, cotton, sugar, soymeal are languishing for want of international parity. But here is a market opportunity knocking at our doors (call it “acche sitare” or “acche din”). It will be an utter disgrace if we miss this break when 10 million tonnes of wheat stocks at FCI are waiting to be liquidated with blocked funds and FCI continues to survive on high cost of borrowed capital.
Wheat production is likely touch record level of 96.03 million tonne this year(2013-14) despite considerable loss of crop in parts of Madhya Pradesh and Rajasthan. The main reason for higher production is attributed to higher area coverage and favorable weather throughout the season except the second fortnight of February when heavy rains fall and hails storm affected the quality of grains adversely.
Carry out includes private stock of 1 to 1.5 million tonne. Thus production would be 1.29 percent higher than last year. However, temperature in March remains crucial for late sowed crop in Uttar Pradesh and Bihar. Abnormal rise in temperature may affect the grain size and has potential to downgrade the final size of the crop in both the states.
With 24.04 million tonne carryout total availability for 2014-15 marketing year would be around 120.67 million tonne against the total usage of 94 million tonne including export. Carryout for next season would increase from 24.64 million tonne to 26.67 million tonne, an increase of 8.23 percent. This implies sufficient supply throughout the season.
Export quantity has been downgraded to 6 million tonne as favourable condition for Indian wheat in the global market is unlikely to continue in the third quarter with expected arrivals in Black Sea Region from June onward. Australian crop too would start hitting the market from October and it may pressurize wheatprices in the global market.
As wheat procurement season set to commence tomorrow, Punjab and Haryana are eyeing crop purchase of 185 lakh tonnes (LT) for central pool, 10 per cent higher over last season's procurement.
With untimely rains this month likely to have adverse impact on yield, wheat crop still remained unripe at most of places in both states, delaying harvesting by at least 10 days, officials said here.
With the addition of new storage space, both Punjab and Haryana are unlikely to face storage crisis this year, unlike in previous years, they said.
"A target of 115 LT has been fixed for wheat procurement from Punjab for Rabi Marketing season 2014-15," a senior official of Food Corporation of India (Punjab) told PTI here today, adding that all arrangement for wheat procurement was in place.
Last year, wheat purchase for central pool was 109.5 LT from Punjab.
Punjab, the food basket of country, had witnessed all-time high crop purchase of 128.30 LT in 2012-13 season.
The neighbouring state Haryana has set a target to procure 70 LT of wheat in the new marketing season.
"Though the target has been fixed at 70 LT, the crop arrivals may remain 65 LT in Haryana," an FCI (Haryana) official said here.
Haryana procured 58.82 LT of wheat last season.
Untimely rains accompanied by hailstorms this month at several places in both states are likely to cast a shadow over bumper crop.
"We have observed that wheat crop at several places got flattened because of rains and strong winds which would impact overall crop yield," said a FCI official.
Punjab and Haryana are eyeing wheat production of 168 LT and 123 LT, respectively, for current season.
"Moreover, crop has not matured as it is still greenish in colour and it has not attained golden yellow colour and hence there will be delay in harvesting," he said.
"We feel crop arrivals will start after April 10 in Haryana," he added.
In Punjab also, wheat crop remained unripe, indicating crop arrivals to trickle in second week of April, FCI official said.
Tunisia's state grains agency bought 50,000 tons of soft millingwheat and 25,000 tons of barley on Friday, booking the volume it had sought in its latest international tender, Europeantraders said.
For the millingwheat, Tunisia purchased one cargo of 25,000 tons at $316.74 a ton, cost and freight included, and another at $318.74 a ton C&F. It bought the barley at $268.74 a ton.
According to the tender terms, the wheat was for shipment between April 25 and May 25 and the barley between April 25 and May 15, depending on the origin.
INDIA will continue to be a low-cost exporter of wheat over the next 12 months, according to a United Arab Emirates (UAE) based grain buyer, specialising in the Indian wheat industry.
Speaking at the Global Grains Asia conference in Singapore earlier in the month, Mandeep Singh Bindra, of Emirates Grain Products, said Indian production was likely to exceed domestic demand this year.
With harvest due to commence in April, it is likely India will again come to the market to export grain, providing government export licences are issued.
The Indian government has been notoriously cautious about issuing export licences in the past, concerned about food security in a nation of 1.2 billion people.
However, a run of seven consecutive above-average years has meant exporting has been a reality for the last few years.
The government is also conscious of the high waste rates in a country without good grain storage infrastructure and recognises it is better to earn dollars for grain rather than have it spoil.
Mr Bindra said with relatively reliable monsoon rains of late and improved production methods, yields were going up, and as farmers saw the results, more were producing wheat, so the area planted is also growing.
And Indian wheat is going to provide some serious competition for Australian wheat into price conscious markets, at least until new season Black Sea crop comes on line, at which stage he said it was likely exports from the subcontinental nation would halt.
Mr Bindra said on a like-for-like basis you could get Indian wheat $27/t cheaper than Australia’s APW grade product.
However, there will be limits in terms of exports due to the policies of individual Indian states.
“A price of $US250/t FOB translates to about $US200/t on-farm,” Mr Bindra said.
“In many cases, Indian states guarantee $US225, even $US250/t, so why would growers sell to private buyers?”
Mr Bindra has production for 2014 pegged at 93mt, and domestic consumption at 89.1mt.
Japan, Asia’s second-largest wheat importer, raised its purchasing plan from the lowest level in four years after domestic production of the grain declined, the Agriculture Ministry said today in a report.
The government plans to import 4.93 million metric tons of wheat for food in the year beginning April 1, from 4.91 million tons this fiscal year, the lowest amount since the year ended March 31, 2010, according to the ministry.
Domestic wheat output decreased 6 percent to 806,000 tons last year from 2012 as yields in Hokkaido, the largest growing region, dropped 12 percent because of weather. Japanese demand is forecast at 5.71 million tons in the next fiscal year, rising 2 percent from a year earlier, the report said.
The nation plans to hold 943,000 tons as reserves for the next fiscal year, raising from 938,000 tons a year earlier, to ensure supply stability, it said.
The ministry controls overseas purchases and domestic sales of wheat for food security. Japan purchases almost 90 percent of its grain from overseas.
The wheat contract for May delivery increased as much as 0.5 percent to $7.1175 a bushel on the Chicago Board of Trade. Futures were at $7.08 by 3:20 p.m. in Tokyo, climbing 17 percent this year.
Indian wheat prices remain firm in the global market with no signs of an ease off in the Ukraine-Russia crisis. Delayed harvesting of wheat in Rajasthan and parts of Gujarat owing to cool weather is also attributed to the rise in prices to $285-290 a tonne for May delivery from a low of $265 a tonne in January.
However, in the volatile market industry sources say that private exporters are not keen on further forward contracts and adopt a wait and watch policy. Business conglomerates from ITC, Cargill, Noble, Louis Dreyfus, Glencore, Bagadiya Brothers and Emmsons have been in the market since January.
"If the crisis in Ukraine-Russia continues we may see bulk buyers flocking to India and domestic prices may go up due to sudden demand pull," said Tejinder Narang a grain analyst. Indian wheat prices are currently the cheapest compared to Australian, Russian and French.
Exporters state that wheat was sold on multi-origin basis and specification and Indian wheat could soon see arise in demand. "India wheat will be blended with high priced wheat from European Union for Middle East market. The contract size will fall to 20,000 tonne from 50,000-60,000 tonne as being done earlier due to uncertain global and domestic market," said a global player in wheat trade.
According to some exporters the buyers were ready to buy wheat at even $290 a tonne, but sellers were reluctant in hopes of prices to firm further amid reports of Rajasthan government likely to give bonus to wheat farmers this season. "I have been able to only buy 500 tonne wheat from around Rajkot in Gujarat as supplies have been low," said another global grains and oil seeds company official.
Since January this year, exporters have been doing forward contracts for March-April-May delivery ahead of the wheat crop arrival from Russia, Ukraine, America and Australia. "The market is taking a breather after 3-4 week of rally. We feel that it is a good time for market to sell and not hold as the rally might not stay for long," said BK Anand, head, grain supply chain, Cargill India.
Global wheat prices, which were in a strong downtrend since 2012, have seen a sharp reversal since January.
Wheat contracts traded on the Chicago Board of Trade (CBOT) had tumbled about 42 per cent from the 2012 high of $9.47 a bushel to a low of $5.50 in January. The initial trigger for the price reversal came from the unusually cold and freezing winter in North America and dry weather in Latin America that could have caused damage to the crops and delayed shipments from the US, Canada and Argentina.
The rally has gained momentum now after the Crimean crisis. Concern over a possible supply threat from the Black Sea region is providing additional support for wheat.
According to data available from the International Grains Council, Russia and Ukraine together, which ship from the Black Sea region, contribute about 15 per cent of the global wheat export. The total supply of wheat for 2012-13 has been estimated by the US Department of Agriculture (USDA) to fall by 4.6 per cent to 855 million tonnes from 896 million tonnes in 2011-12. However, supply is expected to increase in 2013-14 by some 4 per cent to 888 million tonnes on higher production in India and Australia.
On the other hand, global demand, which is estimated to have dropped by 2.6 per cent in 2012-13 to 679 million tonnes, is projected to increase by 3.7 per cent in 2013-14 to 704 million tonnes. Expected increase in consumption from India, Australia, Iraq and Morocco will contribute to increased demand, according to data from the USDA.
On the domestic front, wheat production has been projected lower by 2.5 per cent at 92.5 million tonnes in 2013-14 as compared with an estimated rise in supply of 9.2 per cent in 2012-13. Demand is expected to increase 4.4 per cent in 2013-14 from an estimated 3.4 per cent increase in 2012-13.
Long-term view: Wheat futures trading near ?1,600 per quintal on the National Commodity and Derivatives Exchange (NCDEX) is on a long-term uptrend.
There is still room left for the rally to extend within this uptrend. An important long-term resistance is near ?1,830. Failure to break this resistance could turn the outlook negative. A reversal from ?1,830 would have the potential to drag the contract lower to ?1,400-1,350 in the long term. On the other hand,
if the contract manages to breach the resistance at ?1,830, the current rally can extend to test the next resistance in the ?1,930-1,950 zone. In the global market, CBOT wheat contracts, which are currently trading near $6.93 a bushel, are nearing a crucial long-term resistance at $8.
The contract has to breach this resistance to extend the current rally to $9 and $10. That said, caution is required at this juncture, for failure to breach the resistances in global and local chart can usher in deep declines.
Medium-term view: The medium-term trend is up for the NCDEX wheat contract. The 100-week moving average currently at ?1,530 is the key support.
As long as the contract trades above this support, it can rise to ?1,800-1,830 over the medium-term. The outlook would turn negative only if the contract falls below its 100-week moving average. The subsequent targets on such a fall will be ?1,500 and ?1,450.
Short-term view: For the short-term, the contract could trade in a sideways range. The resistance at ?1,710 is holding well as of now. Inability to breach this resistance could keep the contract in a range of ?1,580 and ?1,710 in the short-term.
However, the bias within this range would remain bullish. A breakout above ?1,710 will then take the contract higher to ?1,780. The 55-week moving average currently near ?1,585 is the key short-term support for the contract. If the contract falls below ?1,585, it can target ?1,530. But the probability for such a fall is less as of now.
The state agriculture department has estimated wheat production in Gujarat in the current financial year to be at about 4.80 million tonnes. It is 80.50 per cent higher than last year's production.
With record production, domestic demand, mainly from South India, and export demand has stabled the market and farmers are getting good price for their commodity.
"This year, good monsoon encouraged farmers of the state for higher sowing of wheat. In addition, it has increased the yield of the crop and as a result, wheat production is likely to be record high in Gujarat," said state agriculture minister Govind Patel.
As per agriculture department's data, wheat production for 2013-14 has been estimated at 4.80 million tonnes as against 2.66 million tonnes in 2012-13.
The yield of wheat has been estimated to be 3,200 kg per hectare for this year. Last year, it was 2,800 kg per hectare.
Wheat was sown in about 1.5 million hectares this year while in last year, it was 950,000 hectares in previous year.
Since February end, arrival of the new crop has started mainly in Saurashtra.
At presently over 1,00,000 bags (a bag of 100 kg) arrives every day in various markets of Gujarat.
According to traders, it will increase to 1,50,000 bags by March end.
In spite of high arrivals in the market, wheat price have risen in March because of demand from South India and exporters.
Nayan Thakkar of Vinayak Industries said, "Demand from South India for mill quality wheat is very good. In addition, export demand is also there in the market."
Exporters are buying for Indonesia, Malaysia, Philippine, United Arab Emirates (UAE) and other gulf countries.
Vinayak Industries has sent about 10,000 tonnes mill quality wheat to South India this month.
Price for South India is ruling between Rs 1,500 per quintal and Rs 1,640 per quintal.
Farmers are getting good price of wheat as demand is good.
During March, wheat prices increased about Rs 25-40 per 20 kg in different APMCs of Gujarat.
Price of Lokwan variety wheat is ruling between Rs 295 per 20 kg and Rs 364 per 20 kg while Tukda wheat price is priced between Rs 297 per 20 kg and Rs 425 per 20 kg.
However, traders said that price will not rise further as arrivals are increasing.
The crisis in Ukraine may give India an opportunity to export more wheat, provided we ship out more, as our central pool stood at 24.2 million tonnes, twice more than the buffer and strategic needs
Despite the US and European threats and entreaties, Russia went ahead supporting the referendum, which overwhelmingly approved Crimea to become a member state of Russia. In effect, this peninsula was part of Ukraine and is now under Russian control.
Indian trade with Commonwealth of Independent States (CIS) has been growing in the last few years and in 2012-13, the total trade between India and Ukraine amounted to $3.18 billion. While Ukraine exports edible oils, petroleum products and fertilisers, Indian exports cover a number of products, of which pharmaceuticals supplies alone have grown, in recent years, to $154 million. After Russia, it is Ukraine, the second largest trading partner for India, in the CIS group. Indian trade with CIS amounted to $11.58 billion
Apart from natural gas, which Ukraine is estimated to have large reserves, it is also a serious Wheat supplier in the international market, often in competition with Indian bids.
In the case of wheat supplies from India, many times we have lost international contracts due to better offers from Ukraine. With the current crisis on hand, it is just possible, that Ukraine may refrain from offering its wheat. Traders in this grain have been looking at France, as a nearby alternative. It is believed that due to Crimea's move to join Russia, the spring grain to be sown this year in Crimea could be delayed, and, in any case, it is unlikely to be available for export via Ukraine. It is reported that the grain output in Crimea is 1.2% of Ukraine's overall harvest in 2013.
Ukraine expects to export 10 million tonnes of wheat, between July 2013 and June 2014, but, already, in January, they have been able to ship out 7 million tonnes, to avoid the crisis that was looming large at that time.
As of now, Indian wheat tenders, floated by both MMTC and PEC have received prices in the range of $282 as against the indicated "floor price" of $260 per tonne. A total of 150,000 tonnes are on offer, with 80,000 tonnes ex- Kakinada port (MMTC received bids at $281.05), while 70,000 tonnes ex-Kandla port (PEC received bids at $ 282.10) from some 17 bidders.
It would be in our national interest to probe the possibilities of "accepting" more than one or two bids, even if by negotiation, to ship out more wheat from the country, as our central pool stood at 24.2 million tonnes, twice more than the buffer and strategic needs. At all costs exports we must, and exceed the target of five million tonnes from both private and public stocks, bearing in mind that there are weather issues in the US, affecting their crop and the political crisis in Ukraine is not yet over.
Nature has played against India too, in the form of hailstorm in Madhya Pradesh, which is reported to have shrunk the estimated crop size by two million tonnes, according the state government. Yet, the current overflowing stocks in the FCI godowns have to be cleared soon and make way for the new arrivals, when harvests take place in the next few weeks.
At the moment, India is a helpless spectator in this crisis and we need to watch the situation carefully. Russia may even face the prospect of economic sanctions from the West, though, the thought of reaction from gas supplies, which account for 20% of its export revenues may result in both sides exercising great caution not to take the wrong step in this matter.
India's state-run PEC Ltd has floated two tenders to export 65,000 tonnes of wheat from Krishnapatnam and Visakhapatnam ports on the east coast.
The last date for submission of bids in both tenders is April 21, the company said in two separate statements on Thursday.
Apart from PEC, state-run traders STC and MMTC have also been floating global tenders to export wheat from government warehouses to cut huge stocks.
Russia's standoff with the West over Ukraine and the threat of sanctions by the US seem to have come as a boon for Indian wheat traders. Global wheat prices rose by 3% to $290-300 a tonne in a week's time. Indian traders feel that it is a good opportunity to cash in on and want the government to allow more wheat exports from the government stock.
However, the pace of exports from the government granaries has been very slow. From August 2013, wheat exports have been only 1.1 million tonne so far out of the targeted 2 million tonne till June 30.
Some tenders are due for bidding in the first week of April for a quantity of over one lakh tonne.
"India now has the time to gain advantage of the global prices. The crisis is unlikely to get over soon in Ukraine and the prices will further firm up," said Tejinder Narang, a grain consultant.
Exporters say that with wheat production touching 95.6 million tonne this year, additional exports of a few lakh tonne could be viable. "More tenders should be opened for exports and hike allocation as these values will not come once Russian wheat arrival begins," said Pravin Dongre, chairman of the India Pulses and Grain Association.
According to traders, Indian wheat demand in the global market would continue till July-August, after which supplies will pick from the Black Sea countries, America and Australia.
Demand for Indian milling wheat was primarily coming from Bangladesh, the Middle East, Southeast Asian and African countries.
According to the officials in the food ministry, India is unlikely to allow more wheat exports. "The government wants to curtail the existing exports and no major tenders will be floated in the coming months," said an official from one of the government trading firms.
State Trading Corporation, MMTC and PEC have been floating tenders for the exports at a base price of $260 a tonne.
Another government official said that the reports of wheat loss across Madhya Pradesh and Maharashtra could be another reason for the government to discourage more exports. According to the agriculture ministry officials, wheat crop has been damaged on 0.53 million hectare land in Maharashtra and on over 8 lakh hectare in Madhya Pradesh, owing to unseasonal rains in the February-March period.
On March 1, wheat stocks in the Central pool were at 20.8 million tonne compared to 27.1 million tonne in the same period of the previous year. Wheat stocks on April 1, as per buffer norms, should be 4 million tonne and strategic reserves at 3 million tonne.
A Food Corporation of India (FCI) official said that the stock position was comfortable for the implementation of the Food Security Act.
"By June, we should be able to export another 0.35 million tonne wheat, taking total exports at 1.45 million tonne. The tenders floated will be of small quantity like 25,000-30,000 tonne," he added.
Japan's Ministry of Agriculture said it received no bids for the import of feed wheat or feed barley in a weekly tender under the simultaneous buy and sell (SBS) auction that closed late on Wednesday.
It had sought 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley in the tender that is usually conducted weekly. It is seeking the same amounts for each grain to be loaded by June 30 or arrive in Japan by Aug. 29 in a similar tender that will be held on March 26.
Japan buys a small portion of feed wheat and barley via so-called SBS auctions, in which end-users and importers specify the origin, price and quantity of grain, allowing millers to meet their varied needs for the feed grain.
India's wheat export trade is expected to continue at similar levels to last season and likely to remain at around 5 million tonnes for at least the next two years, according to a local source at this year's Global Grain Asia, attended by The Public Ledger.
As the country releases its remaining 400,000 tonnes for export, Mandeep Singh Bindra, head of grains procurement, at Emirates Grain Products explained that this year will see business as usual in terms of volumes.
Indian wheat is likely to fetch a price as high as US $ 290 a tonne in global markets in coming weeks as supply from Ukraine is likely to be hit by the escalating political turmoil there, traders said today.
The price of Indian wheat has risen by US $ 15 in the last three weeks and ruled at US $ 281-282 (free-on-board basis) this week, traders said on the sidelines of Global Grain Asia summit here. The wheat price may touch a high ofUS $ 290 per ton on free on board (FOB) basis in the coming weeks, they said.
"We see India exporting 500,000 tons of wheat to replace any shortfall from Ukraine due to political uncertainties," an international commodity trader said.
Traders are also forecasting India to export 5 million tonnes of wheat this year, up from 3.6 million tonnes shipped last year. "The regional wheat market is certainly getting better for India. We see Indian wheat exports increasing as long as prices are aboveUS$ 260 per tonne FOB," said a West Asian trader, requesting anonymity.
Preparations were underway at Indian ports for April shipments, with private traders having committed 200,000 tonnes and the state-tender basis volume of 150,000 tonnes to West Asian and South-East Asian markets, traders said. They said Indonesian wheat mills were looking for 40,000 tonnes from India while another said a 50,000 tonne Indian wheat tender was confirmed for April shipment to Bangladesh.
Indian wheat export to Saudi Arabia is also forecast to increase to 200,000 tonnes this year, up from 60,000 tonnes shipped last year, according to traders. If the Russian-Crimea political tension escalates, and the US-led trade sanctions are imposed on Russia, Indian wheat would cut into the Ukraine-Russian wheat share of West Asia and South East Asian markets.
Last year, the Indian wheat export was slower due to higher price bench mark. But prices are improving day-by-day these days, especially caused by the Russian-Crimea tension, according to the traders. India was sitting on a wheat stock of 28 million tonnes as on January this year. The country had allowed export of 2 million tonnes of wheat for 2013-14 fiscal.
India is planning to issue tenders within a month to export up to 500,000 tonnes of wheat, a state-run trading company official said on Thursday, encouraged by higher global prices and expectations of tighter supplies from Ukraine.
U.S. wheat futures climbed to a four-and-half month high on Thursday, adding 8 percent in three sessions amid uncertainty over grain shipments from Ukraine as the political crisis there continues.
"The government allowed us to sell 2 million tonnes and we have already done 1.5 million tonnes," said the official, who declined to be identified.
"There are plans to issue tenders for the balance 500,000 tonnes before mid-April as prices are attractive now."
Private traders are also aggressively marketing Indian wheat, with exports in the second quarter seen hitting 1 million tonnes, traders said on the sidelines of a grains conference in Singapore.
India's MMTC Ltd received the highest bid of $281 per tonne for its 80,000 tonne wheat export tender, while PEC Ltd got the highest bid at $282.1 per tonne in its tender, trade sources said on Wednesday.
That compares with a price of $274.9 per tonne PEC fetched in a tender late last month.
Some global trading companies have stopped offering Ukrainian grains for future shipments.
The European Union agreed on a framework on Wednesday for its first sanctions on Russia since the Cold War, a stronger response to the Ukraine crisis than many expected and a mark of solidarity with Washington in the drive to make Moscow pay for seizing Crimea.
"Our company has stopped dealing with Ukrainian suppliers until the crisis is resolved," said one Singapore-based trader at an international trading company.
"It is better to be safe than sorry."
European Union milling wheat futures rallied to a near 11-month high on Wednesday, buoyed by concerns over the political crisis in Ukraine.
Indian wheat crop is likely to hit a record high of around 100 million tonnes, although there have been some concerns over quality with unseasonal rains in Madhya Pradesh and Uttar Pradesh states, which produce high quality wheat for exports.
The crop has suffered only small damage, traders said.
India's MMTC Ltd has received the highest bid of $281 per tonne for its 80,000 tonne wheat export tender, trade sources said on Wednesday, higher than the government's floor price of $260 per tonne.
The state-run trader issued the tender last week offering the grain from government warehouses for shipment from the east coast by mid-April.
MMTC received eight bids for the global tender, said one of the sources.
Earlier, state-run trader PEC Ltd received the highest bid at $282.1 per tonne in a similar wheat export tender that offered 70,000 tonnes from the west coast.
These tenders are part of the government's plan to sell 2 million tonnes of the grain overseas until end-March, as it attempts to trim bulging stocks.
Japan's Ministry of Agriculture
said it would import 25,000 tonnes of feed-quality wheat and
70,000 tonnes of barley for livestock use via a simultaneous buy
and sell (SBS) auction that closed late on Wednesday.
The ministry had sought 120,000 tonnes of feed wheat and
200,000 tonnes of feed barley in the tender that is usually
conducted weekly. It is seeking the same amounts for each grain
in a similar tender that will be held on March 19.
The cargoes for the March 12 and March 19 tenders are
required to be loaded by June 30 or arrive in Japan by Aug. 29.
Japan buys a small portion of feed wheat and barley via
so-called SBS auctions, in which end-users and importers specify
the origin, price and quantity of grain, allowing millers to
meet their varied needs for the feed grain.
Details of the results are below, with the quantity in
tonnes and the average price in yen per tonne:
QUANTITY AVG IMPORT PRICE AVG SELL PRICE
Feed wheat 25,000 N.A N.A
Feed barley 70,000 N.A N.A
The Centre has decided not to sell more wheat stocks through the open market sale scheme (OMSS) after Food Corporation of India (FCI) reported a sale of nearly 5.8 million tonne of grain by floating tenders to bulk buyers.
“There would not be any more tenders to sell excess wheat stocks under OMSS,” a food ministry official told FE.
Onother hand, the FCI and state government-owned procuring agencies such as Pungrain (Punjab) and MP Civil Supplies Corporations have already started preparations for the wheat procurement drive for new marketing season (2014-15) from April 1.
The government had set a target to sell 8.5 mt of wheat to bulk buyers under OMSS this year. The FCI was holding on far more stock than required. Even at the start of February 2014, FCI had wheat stock of more than 24 mt which is far more under the strategic reserve and buffer stocks norms.
The food ministry official said wheat was being sold by FCI through weekly tender to the private traders with a base price of R1,500 a quintal, along with freight cost to the concerned locations. The corporation has realised average price of more than R1,603 a quintal for the wheat sold to private traders so far.
Although the Cabinet had cleared the sale of excess stock in September 2013, there was a lukewarm response initially to OMSS as the grain was to be sold only at Punjab and Haryana depots. Subsequently, the government decided to allocate grain at state-level depots of FCI.
About 20 key consuming states such as Uttar Pradesh, Madhya Pradesh, Kerala, Tamil Nadu, Karnataka, Odisha, Bihar, West Bengal and Maharashtra were allocated 2 lakh tonne of wheat for sale to bulk buyers. Himachal Pradesh and northeastern states were allotted 50,000 tonne of wheat each under OMSS.
“Supply situations have improved in last few months with the government selling excess grain stock through tendering,” Adi Narayan Gupta, former president of Roller Flour Millers Federation of India, said.
Experts said the decision to release grain under OMSS would help contain the prices of wheat. As per the Agricultural Marketing Information Network (Agmark) data, wholesale wheat prices were quoted on Monday at R1,665 per quintal in the Ghaziabad market (Uttar Pradesh) and R1,685 a quintal in the Jabalpur market (Madhya Pradesh).
Meanwhile, in anticipation of a bumper wheat crop, the government has raised the procurement target of the key grain at 31 million tonne (mt) for the current 2014-15 marketing season.
Last year, the government had to scale down wheat procurement target from 34 mt to 26 mt, and eventually could purchase only 25 mt of grain.
As per the second advance estimate released last week, the wheat production is likely to be around 95.6 mt in 2013-14 against 93.5 mt the previous year.
The wheat is a winter crops and mainly grown in Punjab, Haryana, Madhya Pradesh, Uttar Pradesh and Rajasthan. The annual domestic consumption of wheat is around 76 mt.
Wheat exports from the country have increased after the political crisis in Ukraine. Prices, too, have shot up — the grain is now fetching $275 a tonne in the international market even as earlier efforts to sell it at lower prices had failed.
India is saddled with a huge stock of 24 million tonnes of wheat against the domestic requirement of 11.2 million tonnes. It had offered around 2 million tonnes for export in August to empty its overflowing granaries and earn foreign exchange. However, it could find few buyers even at $260 a tonne.
With the conflict deepening in Ukraine, one of the world’s biggest exporters of wheat, global prices have started moving up.
The east European nation exports around 18 million tonnes annually.
Global commodity giants feel Ukraine’s sales will fall drastically with trade and commerce being held up by the ongoing revolution followed by a dispute over its coastal territories with Russia.
The rise in global prices because of dwindling supplies prompted Anglo-Swiss commodity giant Glencore to scoop up around 160,000 tonnes from the Food Corporation of India earlier this week.
Prices of wheat in Ukraine are rising as the farmers are hoarding the grain as a hedge against the nation’s depreciating currency and political risks, according to reports of the US Grains Council.
Analysts say exports from Ukrainian city Odessa and other Black Sea ports continue, but shippers are concerned about the ports being blocked and the disruption in transport from the hinterland.
Ukraine can still ship around 2.5 million tonnes of wheat to meet its 2013-14 export targets, according to commodity analysts. A huge amount of the grain is lying idle in the country’s silos, giving nightmares to commodity dealers.
For farm season 2013-14 ending June, India is expected to produce 100 million tonnes of wheat compared with 94.88 million tonnes in the previous year. Despite efforts to make space for the new crop through exports and sales to millers, only a little over 3 million tonnes have been sold in the foreign markets so far. The prices in the current farm season had been lower than 2012-13 because of a glut in Indian and US production.
However, with prices firming up because of the Ukraine crisis, top agriculture ministry officials expect sales to reach the targeted 4 million tonnes at rates as high as $300 a tonne.
South Korea, Ethiopia, Bangladesh and Asean members Thailand and Indonesia are among the top buyers of Indian wheat.
India wheat prices remain firm in the global market with reports of crop loss doing the rounds in the domestic market. Prices have firmed up to $280 atonne for March delivery from a low of $265 a tonne in January. Business conglomerates like ITC, Cargill, Louis Dreyfus, Glencore and Emmsons have entered or actively looking at the Gujarat market from where the exports are taking place.
Traders and companies forecast prices to remain firm till late April and then gradually slip as wheat arrivals pick up across the markets in Madhya Pradesh, Uttar Pradesh, Rajasthan and Punjab. "Prices of new crop from Gujarat have firmed by $10 a tonne. Current purchase for March shipments is being quoted at $276-280 freight on board (fob) a tonne," said Rajnikant Rai, COO (agribusiness division), ITC, which is currently catering to the Middle East market.
Rai added that with a higher acreage and good quality produce in Gujarat, traders' only option was to buy from the state. Late rains and hail have impacted wheat crop across western Uttar Pradesh, southern Rajasthan and Madhya Pradesh, resulting in delayed harvest, say traders.
India's state-run trader MMTC has offered 80,000 tonnes of wheat for exports from the Kakinada port on the country's east coast, the company said in a statement.
The last date for submission of bids is March 12 and shipments will be made between March 15 and April 15, the statement said on Wednesday.
Apart from MMTC, state traders STC and PEC have also been floating global tenders to export wheat from government warehouses to cut huge stocks.
Japan's Ministry of Agriculture said it received no bids for the import of feed wheat or feed barley in a weekly tender under the simultaneous buy and sell (SBS) auction that closed late on Wednesday.
The ministry had sought 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley in the tender that is usually conducted weekly. It is seeking the same amounts for each grain in a similar tender that will be held on March 5.
The cargoes in the March 5 tender are required to be loaded by June 30 or arrive in Japan by August 29.
Japan buys a small portion of feed wheat and barley via so-called SBS auctions, in which end-users and importers specify the origin, price and quantity of grain, allowing millers to meet their varied needs for the feed grain.
India's state-run trader PEC Ltd has received the highest bid at $274.9 per tonne in its wheat export tender, trade sources said on Monday, much higher than the government's new floor price of $260 per tonne.
The trader received six bids for the global tender, said one of the sources.
On Feb. 10, PEC issued the tender offering 70,000 tonnes of the grain from government warehouses for shipments from the east coast between Feb. 28 to March 28.
The shipments are scheduled for delivery between Feb. 28 and March 28.
Earlier, state-run State Trading Corp. received the highest bid at $271.1 per tonne for its 110,000 tonne export tender from the west coast.
These tenders are part of the government's efforts to export 2 million tonnes of the grain via state traders until March 31.
The Government may consider allowing additional exports of wheat from the Central pool stocks beyond March 31, in view of higher stocks and production estimates for the current rabi season.
“We may look at it…We have enough stocks,” said Food Minister KV Thomas, when asked whether the Government would allow further exports of wheat from the Central pool beyond March 2014.
“The Food Secretary is holding a meeting today to look at it,” Thomas told reporters on the sidelines of an event organised by the Bureau of Indian Standards. The Food Minister also said that the Government may extend the sale of wheat under the open market sale scheme (OMSS) by two months.
As on February 1, the wheat stocks in the Central pool stood at 24.2 million tonnes (mt), more than twice the buffer and strategic reserve norm of 11.2 mt as on January 1.
Further, the Agriculture Ministry in its latest estimates has pegged the wheat crop in the current rabi season at 95.6 mt.
Wheat harvesting is set to begin later this month in States such as Gujarat and Madhya Pradesh, while the crop is said to be in good conditions in the northern States of Punjab and Haryana.
The Government had allowed exports of 2 million tonnes from the Central pool till March 31 to create storage space for the new crop.
Of this, about 1.5 mt has been tendered, while the actual shipments so far were estimated at 8 lakh tonnes.
In the current financial year, total wheat shipments from both public and private parties are estimated at 4.6 mt till January, sources said. In 2012-13, the total wheat exports from the country stood at 6 mt.
Wheat prices rose by Rs 5 per quintal in an otherwise steady wholesale grains market today due to increased offtake by flour mills.
However, other grains moved in a tight range in limited deals and settled around previous levels. Traders said increased offtake by flour mills helped wheat prices to trade a tad higher.
In the national capital, wheat dara (for mills) inched up by Rs 5 to Rs 1,640-1,645 per quintal. Atta chakki delivery followed suit and traded higher by the same margin to Rs 1,645-1,650 per 90 kg.
India is set to harvest a record 95.6 million tonnes wheat in 2014, the farm ministry said in a forecast on Friday, which could add to already overflowing granaries and put pressure on the government to accelerate exports.
Higher exports from the world's second-biggest producer could dampen global prices. India has been struggling to trim inventories and make space for the new season crop that would be harvested from next month.
This is the government's first forecast for total grains output in the 2013/14 crop year. It had forecast in September that the summer harvest would total 129.3 million tonnes.
The government will revise the forecast as harvesting progresses.
Japan's Ministry of Agriculture said it got no bids for the import of feed wheat or feed barley in a weekly tender under the simultaneous buy and sell (SBS) auction that closed late on Wednesday.
The ministry had sought 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley in the tender that is usually conducted weekly. It is seeking the same amounts for each grain in a similar tender that will be held on Feb. 12.
Japan buys a small portion of feed wheat and barley via SBS auctions, in which end-users and importers specify the origin, price and quantity of grain, allowing millers to meet their varied needs for the feed grain.
Wheat procurement in 2013-14 is expected to be higher than last year. Timely sowing, new and more weather-resistant varieties, with timely rain, have triggered hopes for a higher crop and larger procurement.
The Food Corporation of India is yet to prepare final estimates for procurement but sources told Business Standard this could touch 35 million tonnes, about 40 per cent higher than last year. The procurement in 2012-13 was 25 mt. According to sources, a meeting by the food secretary is scheduled on February 17 to discuss procurement.
The target for procurement last year was actually 44 mt. This could not be achieved due to some crop damage from rain in Punjab and Haryana towards the end of the season and heavy buying from the private traders in Madhya Pradesh (MP). These three contributed 23 mt of the wheat last year (Punjab 10.9 mt, MP 6.3 mt and Haryana 5.9 mt).
According to some private traders, the procurement this year would be without any laxity, as this is an election one. Farmers prefer to sell wheat to the government because the purchase price of private traders is inconsistent.
Raj Kumar Phor, a farmer in Karnal district (Haryana) said, “Many farmers in our area have sown the early varieties to save on yield if the temperature becomes unfavourable. Cool weather is more conducive for the crop in the maturing stage. This happened in 2012 and resulted in an incredible harvest.” He added the winter monsoon had been adequate and occurred at the right time. “We registered a yield of 26-27 quintals a hectare last year and expect up to 30 quintals this season.”
The Director of Wheat Research Institute, Karnal Indu Sharma corroborated that impact of better technology and good weather (if prevails till March) may help getting higher yields.
India has exported 5,00,000 tonnes of surplus wheat in the last five months with neighbouring Bangladesh buying a major portion of total shipments.
In August 2013, the Centre had allowed export of 20 lakh tonnes of wheat via public trading firms STC, MMTC and PEC at a base price of $300/tonne. Later, the floor price was cut to Rs 260 per tonne to make shipments viable.
"So far, the government has approved tenders for export of nearly 10 lakh tonnes of wheat. Of which, 500,000 tonnes has already been shipped out as of now. The rest is under the process," a senior Food Ministry official told PTI.
Wheat stored in warehouses of state-run Food Corporation of India (FCI) is being exported. Much of the exports has been shipped to neighbouring Bangladesh, while some quantities to the Middle East and Korea, the official said.
The official mentioned that Bangladesh is sourcing wheat from India despite higher price being quoted as compared to the US and Australia, mainly because of lower logistic costs.
India is getting good price even as global prices are bearish in view of higher supplies. "We have so far exported wheat at above $280 per tonne," the official said.
According to the official, trading firms are in the process of issuing tenders for export of rest 10 lakh tonnes of wheat and would be done by March this year.
Indian wheat competes with 'US SRW wheat gulf' and 'Black sea milling wheat'.
Till last week, export price of Soft Red Winter (SRW) wheat delivered at the US Gulf port stood at USD 259 per tonne, while black sea milling was ruling at $283 per tonne, according to traders data.
India was sitting on a wheat stock of 280 lakh tonnes as on January 15 this year. The government expects earnings of more than Rs 3,400 crore from export of 20 lakh tonnes wheat in the current fiscal.
India's PEC Ltd has issued a global tender to export 120,000 tonnes of wheat for shipment between Feb. 15 to March 25, the state-run trader said in a statement on Friday.
PEC will offer the quantity at Kandla port on the western coast, the statement said.
The deadline to submit bids closes on Feb. 12.
The tender is a part of the government's plan to sell 2 million tonnes of the grain overseas by March as it attempts to reduce bulging stocks.
Wheat prices may have established a bottom and that is good news. The problem is that there is about a 30 percent chance that wheat prices will fall 40 cents or more.
Both the Kansas City March and July wheat contract charts indicate that hard red winter (HRW) wheat prices have not only bottomed out, but prices have increased about 30 cents from the bottom. The KC March contract established support at $6.17, and the July contract established support at $6.13.
Recent wheat market news has been negative on price. India announced that more government wheat stocks will be exported. In March, India is also expected to start harvesting another record wheat crop which will add to India’s massive wheat stocks.
If you are enjoying reading this article, please check out Southwest Farm Press Daily and receive the latest news right to your inbox.
Australia’s wheat harvest was larger than expected. And Argentina is getting its act together and is expected to start exporting wheat soon.
With relatively low corn prices (Illinois/Iowa/Nebraska prices are near $4.25.), there is essentially no feed demand for wheat. Between February and August 2013, relatively high corn prices may have added 75 cents to 85 cents per bushel to wheat prices. That will not happen in 2014.
The only good news is that corn prices also may have bottomed out. The CBT March contract price appears to have established support at about $4.17 and at $4.07. At this writing, the CBT March corn contract price is $4.28.
Bad news price-wise and good news production-wise is that most of the 2014 HRW crop is in relatively good condition. Wheat producers are expected to harvest an above average 2014 wheat crop.
U.S. HRW wheat is priced above most countries export wheat price. The only way very much U.S. HRW wheat will be sold for export is if the value of the dollar relative to other currencies declines, world wheat prices increase, or HRW wheat prices decline. None of these events are expected anytime soon.
This scenario should not surprise anyone. U.S. HRW wheat stocks are tight and are expected to remain tight until midway through harvest. HRW wheat ending stocks are projected to be 197 million bushels compared to 343 million last year and a five-year average of 337 million bushels.
The market will protect the tight stocks by keeping HRW wheat prices above world prices.
At this writing, wheat may be forward contracted for harvest delivery in some Oklahoma and Texas Panhandle elevators for 40 cents less than (40 cents under) the KC wheat July contract price. At this writing, the KC July wheat contract price is $6.25. The forward contact price would be $5.85.
Until the U.S. winter wheat crop comes out of dormancy in late February and early March, little market news is expected that could cause dramatic changes in wheat prices. Some unexpected export sales might occur, but the odds are low.
The bottom line is that if you have wheat in storage and want to sell it, there is not much news in the market to move prices very far up or very far down. Consider selling the wheat in equal increments between now and May.
If you cannot afford to sell wheat for 50 cents below current prices, consider selling all of the wheat now. If there is any good wheat price news, it is probably that there is very little news that is not already considered by the market that will be negative for wheat prices.
Saudi Arabia’s state grains authority GSFMO has issued an international tender to purchase 660,000 tonnes of wheat, European traders said on Thursday.
The recent fall in corn and wheat prices to around three-and-half-year lows has encouraged major importers to buy supplies on a large scale this week.
On Wednesday, Algeria bought about 500,000 tonnes of wheat while Iraq bought 350,000 tonnes of hard wheat.
Ethiopia also tendered for 70,000 tonnes of wheat on Thursday, when Japan also bought 99,052 tonnes and Taiwan bought 73,400 tonnes of U.S. wheat.
The tender deadline is Friday, Jan. 24, and offers must remain valid up to Monday, Jan. 27, traders said.
The Saudi tender sought 550,000 tonnes of hard wheat with a minimum 12.5 per cent protein and 110,000 tonnes soft wheat with 11 per cent protein, traders said.
Some 330,000 tonnes of the two types was sought for shipment to the port of Jeddah and 330,000 tonnes to the port of Dammam.
Shipments of 55,000 tonnes were sought for each port in stages from Apr. 1 to June 30.
In its last reported tender on Nov. 4, Saudi Arabia bought 720,000 tonnes of hard wheat.
Saudi Arabia has become a major importer of both hard and soft wheat since abandoning plans for self-sufficiency in wheat in 2008 as farming in the desert absorbed huge volumes of precious water supplies.
It aims to steadily reduce agriculture and plans to be completely reliant on imports by 2016 to save water.
India is likely to achieve record wheat production on back of good monsoon, Minister of State for Agriculture and Food Processing Industries, Mr Tariq Anwar said at an ASSOCHAM event.
We have been receiving encouraging reports as the weather has been very good and the monsoon has supported us and I think this time we would achieve an-all time high production that would beat all previous records, said Mr Anwar.
On reports of stem rust in a wheat field in Haryana, the minister informed that government has already warned the farmers and it is taking an initiative in this behalf.
Gross inefficiencies in the food supply chain had lead to an extraordinary rise in onion prices and there was no issue related to its production which has remained steady at about 17-18 million tonnes, said Mr Anwar.
"There is something seriously wrong in the way the onion market operates as it is due to inefficiencies in procurement and distribution system that such extreme price distortion takes place," he added. There are governance issues related to licensing of wholesalers, issues related to holding capacity of farmers, issues related to market price information and a number of such issues related to the whole supply chain which creates this kind of pricing contradiction.
The minister further said that it is imperative to create a system to properly incentivise everyone in the supply chain to maximise production and efficiency as the challenge of maintaining an efficient food supply chain was not just limited to controlling post-harvest loss. An efficient supply chain can adversely affect the welfare of producers as well as consumers in a number of ways.
There is a need to develop an incentive system to encourage both producers and distributors or sellers to adopt new technology to maximise production as we have not been able to use even the existing technologies available to us, said Mr Anwar.
The minister also said that presently, farmers are discouraged to produce more as most of the surplus generated from farm produce is cornered by middlemen.
He also stressed upon the role of contract farming to increase farm productivity and thereby increase agriculture income in the future. Contract farming has the potential to change the face of Indian agriculture quite significantly as it has helped boost the egg and milk production by 166 per cent and 100 per cent during 1993-94 and 2011-12 while food grain production increased by 40 per cent during this period.
He also sought serious industry intervention while emphasising on the importance of contract farming. Most States today would not debar any company from procuring directly from the farmers provided certain procedural issues are followed, said Mr Anwar while conceding that there are certain issues related to APMC Act in various states.
The minister further informed that the Ministry of Agriculture is engaged in organising Farmer Producer Organisations (FPOs) across the country through Small Farmers Agri-business Consortium (SFAC) which has taken up an initiative to incubate 250 FPOs covering 2.5 lakh farmers. These organisations need a helping hand and procurement support from business and industry and I would urge the industry to take a look at these organisations as that shall be a win-win situation for both you and the farmers of the FPOs.
The story of the Indian agriculture has been one of tremendous growth, both on the supply as well as the demand fronts, said the ASSOCHAM president, Mr Rana Kapoor.
A host of challenges and opportunities exist in the augmentation, creation and improvement of the agri-infrastructure in India across various stages. These include farm-gate (pre-harvest, harvest), post harvest (marketing, storage, logistics) and food processing (with a focus on sectors like Diary where a second White Revolution is needed to actualize the full benefits of the first one), said the ASSOCHAM chief. A well formulated Government policy, with adequate focus on appropriate technology, PPP and other partnership models as well as creation of an enabling environment for inviting private enterprise and capital are some of the ingredients that will drive the Agri-Infrastructure investments in India.
Chinese wheat importers are seeking cargoes for April shipment, trade sources said, as the world's top consumer aims to take advantage of global prices trading around three-and-half-year lows.
China's move to import wheat coincides with a rush among the world's top buyers to grab supplies of the grain after benchmark Chicago prices fell almost 7 percent this month, adding to last year's 22 percent decline.
"We are getting enquiries from Chinese buyers," said a manager at an international trading company in Singapore. "They are looking at U.S. as well as Australian wheat."
China has been actively importing wheat since mid-2013 after its crop suffered extensive damage due to unfavourable weather. The country is likely to emerge as the world's biggest wheat buyer in the year to June, 2014, with imports expected to surpass 9 million tonnes.
One trader in Sydney said Chinese buyers are seeking 200,000 tonnes of Australian standard wheat for delivery in April and May but no deal has been signed.
Australian wheat prices, which are trading at a premium to the global market, could get a further boost if China makes large purchases, traders said.
Australian prime wheat for March delivery on the east coast is being offered at $70 a tonne premium to Chicago prices as a blistering heat wave threatens grain production.
Typically, Australian wheat attracts a premium of around $20 a tonne and sometimes even trades at a discount to global prices.
A heat wave has hit Australia's south and southeast, with soaring temperatures causing worry. The weather will not hurt the 2013/14 crop as it has been harvested but it could reduce soil moisture for next year's crop which will be planted in April and May.
U.S. wheat hovered around its lowest since July, 2010 as ample global supplies continued to weigh, although fresh demand from top importers, including China, is putting a floor under the market.
The pullback in prices has stirred fresh demand, with top importer Egypt making two tender purchases in the past 10 days that brought sales for French and U.S. wheat.
Egypt's main government wheat buyer GASC booked 60,000 tonnes of U.S. soft red winter wheat as part of a 295,000 tonne purchase last week.
Algeria's state grains agency OAIC has issued a tender to buy 50,000 tonnes of optional-origin milling wheat for April shipment while Iraq's state grain board is in the market to purchase at least 50,000 tonnes of hard wheat.
India's state-run trader MMTC has tendered to export 60,000 tonnes of wheat from Pipavav port on the west coast for shipments between Feb. 10 and March 10, it said in a statement on Tuesday.
The last date for submission of bids is Feb. 3.
Indian state-backed trading companies, including MMTC, STC and PEC are floating global tenders to export wheat from government warehouses to cut down huge stocks.
Bangladesh reissued an international tender on Wednesday to import 50,000 tonnes of wheat after the winning bidder failed to supply the grain on time, raising questions whether the country will miss its annual import target for the second straight year.
The imports are crucial for the South Asian nation to feed its poor and keep domestic prices stable at a time it is seeing political turmoil and government wheat reserves are at five-year low levels.
The proposed imports are part of a plan by the Directorate General of Food, the state grains buyer, to ship in 850,000 tonnes of wheat in the year to June 2014.
In the previous financial year, the state buyer imported only 350,000 tonnes against a targeted 800,000 tonnes mainly because of supply failures by traders.
The latest tender was refloated as the winning bidder in the earlier tender missed the supply deadline, a senior official of the state grains buyer said. That was despite new delivery rules in force to ensure supplies are delivered on time.
Another tender was reissued last week as the previous tender drew no response last month amid election-related violence.
The unrest, accompanied by transportation blockades, had crippled the country's supply chain, sending annual inflation higher for the second month in a row in December.
A new government was sworn in this week after the ruling party won the election that was marred by bloodshed and opposition boycotts. But the political turmoil is likely to continue amid growing global and opposition pressure for a re-election.
Bangladesh's state grains agency has so far bought or agreed to buy 250,000 tonnes of wheat in tenders. It is also buying 200,000 tonnes of wheat in a government-to-government deal with Ukraine at $307 a tonne CIF liner out.
The government imports wheat to run welfare programmes for the poor and to keep domestic prices stable. Its reserves have fallen to nearly 950,000 tonnes, the lowest in five years, from 1.4 million tonnes a year earlier.
In addition to the government, private traders also import about 2.5 million tonnes of wheat a year to help meet local demand of 4 million tonnes. Domestic output amounts to about 1 million tonnes.
Wheat consumption is rising in Bangladesh in line with steady economic growth and changes in lifestyles, though rice remains the staple food for its 160 million people.
The deadline to submit offers under the latest tender is Jan. 28, with validity up to Feb. 2, and the wheat is to be shipped within 40 days of signing the contract, according to the official of the state grains buyer.
India is likely to soon permit more wheat exports as the world’s second-biggest producer of the grain looks set to harvest a record crop this year, government sources said, swelling stockpiles in an oversupplied world market.
Any extra supply from India, though, could dampen Chicago prices which have fallen around 9% in the past month due to rising global supply. Leading producer Ukraine has already raised its 2013 grains output forecast to a record.
India is extremely cautious about allowing exports of wheat, a staple for its 1.2 billion population, and lifted a four-year-old ban on shipments in 2011 by allowing only private traders to sell on the world market.
But a succession of bumper crops and poor storage conditions that have led to substantial wastage have prompted a rethink on exports.
Since last fiscal year India has exported nearly 4.5 million tonnes of wheat from state warehouses, and state-backed traders are now selling another 2 million tonnes via tenders.
“In all likelihood, the crop is going to be an all-time high so more exports are almost certain now,” said an Indian government source directly involved in the decision-making process. “But we are yet to take a call on the quantity to be shipped out.”
Japan's Ministry of Agriculture said it would import 42,740 tonnes of feed-quality wheat and 29,505 tonnes of barley for livestock use via a simultaneous buy and sell (SBS) auction that closed late on Wednesday.
The ministry had sought 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley that was either to be loaded by Feb. 7 or arrive by March 7 in the tender that is usually conducted weekly.
It is seeking the same amounts for each grain in a similar tender that will be held on Jan. 22.
Japan buys a small portion of feed wheat and barley via so-called SBS auctions, in which end-users and importers specify the origin, price and quantity of grain, allowing millers to meet their varied needs for the feed grain.
Inaugurating the Sixth Agri Business Summit: Infrastructure, Value Chain and Partnership, which was organised by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in New Delhi on Tuesday, Tariq Anwar, minister of state for agriculture and food processing industries, said India could achieve record wheat production on the back of a good monsoon.
“We have been receiving encouraging reports as the weather has been very good and the monsoon has supported us and I think this time we would achieve an-all time high production that would beat all previous records,” he said. On reports of stem rust in a wheat field in Haryana, the minister stated that the government had warned the farmers and was taking an initiative in this regard.
“Gross inefficiencies in the food supply chain led to an extraordinary rise in onion prices, but there was no issue related to their production, which remained steady at about 17-18 million tonne,” said Anwar, adding that there was something seriously wrong in the way the onion market operates, and the price distortion was due to inefficiencies in the procurement and distribution system.
“There are governance issues related to the licensing of wholesalers, issues related to the holding capacity of farmers, issues related to market price information, and a number of issues related to the whole supply chain. All of these create this kind of pricing contradiction,” the minister added.
He stated that it was imperative to create a system to properly incentivise everyone in the supply chain to maximise production and efficiency as the challenge of maintaining an efficient food supply chain was not just limited to controlling post-harvest loss, adding that an inefficient supply chain could adversely affect the welfare of producers as well as consumers in a number of ways.
Anwar added that farmers are discouraged to produce more, as most of the surplus generated from farm produce is cornered by middlemen. He also stressed upon the role of contract farming to increase farm productivity and thereby increase agriculture income in the future.
“Contract farming has the potential to change the face of Indian agriculture quite significantly, as it has helped boost the egg and milk production by 166 per cent and 100 per cent respectively between 1993-94 and 2011-12, while foodgrain production increased by 40 per cent during this period,” he informed.
He also sought serious industry intervention while emphasising on the importance of contract farming.
“Most states today would not debar any company from procuring directly from the farmers provided certain procedural issues are followed,” said Anwar, while conceding that there were certain issues related to the Agricultural Produce Marketing Committee (APMC) Act in various states.
He added that the agriculture ministry was engaged in organising farmer-producer organisations (FPO) across the country through the Small Farmers’ Agri-business Consortium (SFAC), which has taken up an initiative to incubate 250 FPO, covering 2.5 lakh farmers.
“These organisations need a helping hand and procurement support from business and industry, and I would urge the industry to take a look at these organisations, as that shall be a win-win situation for both you and the farmers of the FPO,” Anwar said.
”The story of Indian agriculture has been one of tremendous growth, both on the supply as well as the demand fronts,” said Rana Kapoor, president, ASSOCHAM.
“A host of challenges and opportunities exist in the augmentation, creation and improvement of the agri-infrastructure in India across various stages. These include farm-gate (pre-harvest and harvest), post-harvest (marketing, storage and logistics) and food processing (with a focus on sectors like dairy, where a second White Revolution is needed to actualise the full benefits of the first one),” said the ASSOCHAM chief.
“A well-formulated government policy, with adequate focus on appropriate technology, public-private partnership (PPP) and other partnership models, as well as the creation of an enabling environment for inviting private enterprise and capital are some of the ingredients that will drive the agri-infrastructure investments in India,” Kapoor said.
State-owned trading firms have so far exported about 3 lakh tonnes of wheat from FCI godowns out of 20 lakh tonnes allowed by the government. “About 3 lakh tonnes of wheat has been shipped so far,” a senior government official said.
In August last year, the Cabinet Committee on Economic Affairs (CCEA) had allowed 20 lakh tonnes of wheat exports till June 2014. The government decided to export wheat as the Food Corporation of India (FCI) had surplus stocks.
According to the official, State Trading Corporation of India, PEC and MMTC have so far floated tenders to export about 17 lakh tonnes of wheat, of which 7 lakh tonnes have been awarded.
The government had lowered the floor price for wheat exports to $260 per tonne from $300 per tonne. The US, Canada and Australia were selling the same quality of wheat in the range of $270-275 a tonne, he said. The FCI expects to earn more than Rs 3,400 crore from wheat exports in the current financial year.
“With heavy snowfall in USA and Canada, there has been a logistic jam in these countries, so in coming days, prices quoted for India wheat are likely to go up,” a trader said.
So far, the average price at which Indian wheat has been exported is about $281 per tonne, with the highest at $289.9 per tonne in November last year for shipment from Krishnapatnam port.
The government had allowed export of 4.5 million tonnes of wheat from FCI godowns during the previous financial year, of which PSUs sold about 4.2 million tonnes at an average price of $311.38 per tonne for over Rs 7,000 crore.
Recently, a Parliamentary committee had suggested there is an urgent need to reduce the food subsidy burden and recommended that the government should fix an upper limit for foodgrain storage.
FCI is the government’s nodal agency for procurement and distribution of foodgrains.
Area under wheat cultivation has rose by 7 per cent to an all-time high of 31.18 million hectares so far in the ongoing rabi season, boosting prospects of a record production this year, Agriculture Ministry said today.
In the case of wheat, more area has been reported from Madhya Pradesh (14.22 lakh hectares), Rajasthan (4.88 lakh hectares) and Uttar Pradesh (4.73 lakh hectares), the ministry added.
Wheat was grown on 29.12 million hectares in the same period last year. Sowing of wheat, and other rabi crops, starts in October and harvesting takes place from April.
The country had produced a record 259.29 million tonnes (MT) of wheat in 2011-12. In the following year, output fell marginally to 255.36 MT.
The total area under rabi crops has touched 61.90 million hectares so far, against the 58.70 million hectares in the year-ago period.
Among other rabi crops, pulses acreage has increased to 15.51 million hectares this season from 14.73 million hectares last year, taking advantage of rains.
Area under oilseeds has increased to 8.62 million hectares during the period from 8.27 million hectares last year.
Total area under rice sown in the rabi season has also risen to 0.72 million hectares during the week ending today from 0.55 million hectares in the year-ago period.
However, the area under coarse cereals has decreased to 5.85 million hectares from 6 million hectares a year ago.
The government has set a rabi production target of 92.50 million tonnes (mt) for wheat, 12 mt for pulses, 14 mt for rice, 4.4 mt for maize and 1.5 mt for barley.
The harvest could total 100 million tonnes (mt) in the marketing year starting April 1, Agriculture Commissioner J S Sandhu said on Thursday. Output had fallen 2.5 per cent to 92.5 mt a year earlier from a record 95 mt in 2011-2012, according to the agriculture ministry.
Crop prices from wheat and corn to canola are slumping as record harvests from the US to Brazil expand global grain inventories. The Standard & Poor's GSCI Index of eight crops fell to the lowest since July 2010 on Wednesday, extending its biggest annual drop since 1981. Record output might force India to accelerate exports from state reserves to make room for the new crop, extending a decline in global food costs tracked by the United Nations.
"Exports will pressure global prices," said Vedika Narvekar, chief manager at Mumbai-based Angel Commodities Broking. "Exports will largely depend on the crop in the US and Russia. Domestic prices will be stable."
Wheat futures tumbled 22 per cent in 2013, as world production climbed 8.4 per cent to a record 711.4 mt versus consumption of 699 mt, according to the US Department of Agriculture (USDA). Futures fell to $5.8675 a bushel on Wednesday, the cheapest since December 2011, and were at $5.8825 in Chicago on Thursday.
Prices in India rallied to an all-time high on December 27, after the government increased the minimum price for farmers to a record. The February delivery contract fell one per cent to Rs 1,640 ($26.4) a quintal on the National Commodity & Derivatives Exchange in Mumbai on Thursday.
"The international market is not very promising for at least six months," said Abdolreza Abbassian, a senior economist at the UN's Food & Agriculture Organization. "If India's output increases, as it looks, global prices will fall below local prices, making exports difficult."
Area for wheat in India may reach a record of 31 million hectares this year, said Sandhu. Sowing increased 5.6 per cent to 30 million hectares as of Janu-ary 3, compared with 28.6 million a year ago, according to the ministry. The average yield of wheat in India is three tonnes a hectare and the crop is planted from October and harvested in April and May.
"The crop will get the benefit from a normal winter predicted," said K K Singh, head of Agromet division at India Meteorological Department. "More than average monsoon rains and its late withdrawal provided adequate moisture."
State stockpiles totalled 31 mt on December 1, compared with 37.7 mt a year ago, according to the Food Corp of India. The government raised the minimum price paid to growers to an all-time high of Rs 1,400 a quintal for the 2013-2014 crop. The government purchases rice, wheat and oilseeds from farmers at guaranteed prices and sell these to the poor at subsidised rates through state-run shops, to prevent distress sales in the open market.
Wheat shipments from India could drop five per cent to 6.5 mt in 2013-2014, according to the USDA. Exports totalled 2.8 mt between April 1 and December 13, according to ministry estimates.
Switzerland-based commodity trading Vitol Group placed the highest bid of $282.62 a tonne for wheat offered for exports by State Trading Corporation (STC) from Mundra Port in the latest tender.
Louis Dreyfus Commodities was the second highest bidder at $280.62. STC, which offered to sell 1.6 lakh tonnes, received seven bids.
These bids were higher than the floor price for exports of $260.
The Government had reduced the floor price for exports from $300 to $260 on October 30 to boost shipments.
The highest price fetched by the Indian wheat so far is $289.9, sometime in mid-November for shipments from Krishnapatnam port.
However, with international prices firming up as the winter crop in the US is threatened by cold snap, analysts said India should reject these bids and float fresh tender at a short notice.
“India would be underselling wheat at these prices as the market has firmed up in the recent past,” said Tejinder Narang, grains trade analyst.
The Black Sea wheat is traded at $305 on free-on-board (f.o.b.) basis, while the French and the US wheat are quoted around $300 f.o.b. for the same quality.
At around $283, Indian wheat would be at a discount of over $20. “Indian wheat deserves a better price. The Government can reject the tender for letting the market know that it can’t be taken for a ride” Narang said.
He further said that the Government should increase the floor price for exports to $285 as at least seven tenders are set to come up in the next 16 days.
The Government should calibrate the floor price for exports in line with the market price to realise the maximum.
Wheat has rallied on concerns that cold snap in the US could affect the crop.
Also, the aggressive buying by countries such as Egypt and Algeria has lent support to the prices.
Over the past week, Egypt has bought 5.35 lakh tonnes from Ukraine, Russia and France at an average price of $317 a tonne.
Algeria and Syria have bought five and two lakh tonnes respectively.
Japan's Ministry of Agriculture said it would import 600 tonnes of feed-quality wheat, and 14,200 tonnes of barley for livestock use, via a simultaneous buy and sell (SBS) auction that closed late on Wednesday.
As a condition of the tender, the grains cargoes will either be loaded by Feb. 7 or arrive by March 7.
The ministry had sought 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley in the tender that is usually conducted weekly, but was not held last week due to the New Year holidays. It is seeking the same amounts for each grain in a similar tender that will be held on Jan. 15.
India, currently a big wheat seller in the global market, could gain from the firm trend in prices of the cereal, triggered by the concerns over severe cold snap affecting the US crop and large purchases made by African countries
State trading entities – MMTC, STC and PEC Ltd – have offered to sell a total of nearly 8.3 lakh tonnes of wheat. Tenders for the sales expected to be decided over the next 17 days.
“India should exploit the current situation to get the maximum price for its wheat. There is a case for upward revision of the floor price for exports,” said trade sources.
India had set minimum export price of $260 a tonne but has received higher quotes from global buyers for tenders floated recently. So far, about 9 lakh tonnes of wheat have been tendered for sale, but sales of about six lakh tones only have been finalised.
The Government has planned to export about 20 lakh tonnes to create storage space for the new crop expected to arrive in April. The country’s wheat stocks as on December 1 stood at 31 million tonnes, almost thrice the buffer and strategic reserves to be maintained statutorily.
The firm trend in global prices is also aided by the aggressive buying from African nations such as Egypt and Algeria last week. Egypt has bought 5.35 lakh tonnes from Ukraine, Russia and France at an average price of $317 a tonne.
Algeria has bought about 5 lakh tonnes, while Syria has bought about two lakh tonnes.
“Going by the recent market trends India should get better price for its wheat. The intrinsic value of the Indian wheat is $290-300 a tonne – a price at which India should be selling,” an analyst said.
Wheat futures, which rallied to a two week high on the Chicago Board of Trade on concerns of crops damage in the US winter crop, eased a bit on Tuesday on signs of slack demand.
Wheat acreage in the current rabi season has touched a record 302 lakh hectares, raising expectation of a bumper harvest of over 95 million tonnes. Prevailing cold conditions across the wheat growing regions of North India are seen aiding the crop.
The total area under wheat cultivation has climbed to an all-time high of 30.2 million hectare so far in the ongoing rabi season, boosting prospects of a record production this year, the agriculture ministry said on Friday.
Although the condition of the crop is good as of now, the ministry is keeping a watch for yellow rust, a fungal disease, which has been detected in Jamuna Nagar in Haryana, it added.
Wheat was grown on 28.63 million hectares in the same period last year. Sowing of wheat, a major rabi crop, starts in October and harvesting takes place from April.
"This is a record wheat acreage. The previous record was 29.9 million hectares in 2012-13 rabi season. Hopefully, if weather conditions remain conducive, we can have record wheat production," agriculture commissioner JS Sandhu said.
The country had produced a record 259.29 million tonnes of wheat in 2011-12. In the following year, output fell marginally to 255.36 million tonnes. Sandhu said another 5-6 lakh hectares are expected to be covered under wheat in the coming days, especially in Bihar, Madhya Pradesh and UP.
So far, Uttar Pradesh has sown wheat on 9.68 million hectares against a target of 9.73 million hectares, while Madhya Pradesh has planted the crop on 5.39 million hectares against a target of 5.9 million hectares. Bihar has sown wheat on 2 million hectares against a planned 2.32 million hectares, he added.
"But the bad news is that yellow rust disease has been detected in Jamuna Nagar in Haryana and we are keeping a watch on it," said Sandhu.
A meeting has been scheduled next week to discuss the preparedness of wheat-growing states to tackle the disease, he added.
Besides wheat, rice, pulses, coarse cereals and oilseeds are also grown during the rabi season. The total area under rabi crops has touched 59.19 million hectares so far, much higher than the 56.98 million hectares in the year-ago period.
Total area sown under wheat crop this year in India is expected to surpass the previous record of 29.9 million hectares in 2012-13, a USDA report has said.
Meanwhile, as per the Agriculture Ministry's data, wheat - a key winter (rabi) crop - has been already sown in 28.69 million hectares. Wheat sowing begins from October, and harvesting from April, in the world's second largest grower.
"Higher planting has been reported in most states on optimal soil moisture conditions and timely harvest of the preceding kharif (summer) crops," the US Department of Agriculture (USDA) said in its latest report.
Wheat planting conditions have been generally favourable throughout the major growing states with adequate soil moisture conditions and adequate irrigation water availability in the major reservoirs and irrigation systems, it said.
Most wheat growing regions have seen a decline in temperatures in the recent weeks, providing favourable early growing conditions for the crop, it added.
Wheat sowing in the major growing states is almost over, except for some late planting in Uttar Pradesh and Bihar following the sugarcane harvest, it added.
As for wheat production, the report said it will "largely depend on winter rains (December-January) and warmer temperatures during the critical grain filling and ripening stages in February and March".
Indian agriculture experts have maintained that if weather conditions remain good, the country's wheat production is expected to exceed last year's 92.46 million tonnes and touch a new record.
The previous record of wheat output was 94.88 million tonnes in the 2011-12 crop year (July-June).
Two Indian state-run traders have issued global tenders to export a total of 220,000 tonnes of wheat for shipment between Feb. 1 and Mar. 5, company statements showed on Tuesday.
State Trading Corp is offering 120,000 tonnes of wheat at the Mundra port on the west coast while PEC Ltd is offering 100,000 tonnes at the Krishnapatnam port on the eastern cost.
The deadline for submission of bids in both tenders is Jan. 23, the statements said.
The tenders are a part of the government's plan to sell 2 million tonnes of the grain overseas by March as it attempts to reduce bulging stocks.
The area under wheat crop sowing in the country has increased by 5.2 per cent in the ongoing rabi season as of December 27.
Wheat has been cultivated on 286.90 lakh hectares compared with 272.79 lakh hectares during the same period in the last season.
The total rabi crop-sown area, including rice, pulses, cereals and oilseeds, has increased to 564.18 lakh hectares from 544.2 lakh hectares a year earlier, the Agriculture Ministry said in a release.
Sowing of rabi crops starts in October. A bumper harvest is expected this year due to a good and prolonged monsoon, which helps to retain soil moisture and support the sowing of rabi crops.
Agriculture Minister Sharad Pawar had said foodgrain production this year may break the previous record of 259.29 million tonnes achieved in 2011-12 if the weather remains favourable through the ongoing rabi season.
Among other rabi crops, the area under pulses has risen to 138.08 lakh hectares this season from 133.04 lakh hectares last year.
Oilseeds are being cultivated on 81.42 lakh hectares compared with 77.72 lakh hectares last year.
However, the rice-sown area dropped to 2.88 lakh hectares from 4.43 lakh hectares. Coarse cereals are being grown on 54.9 lakh hectares compared with 56.22 lakh hectares.
The government has set a rabi crop production target of 92.50 million tonnes for wheat, 12 million tonnes for pulses, 14 million tonnes for rice, 4.4 million tonnes for maize and 1.5 million tonnes for barley.
India's State Trading Corp has issued a global tender to export 160,000 tonnes of wheat for shipment between Jan. 18 and Feb. 18, a company statement showed on Monday.
The state-run trader is offering wheat at Mundra port on the west coast. The deadline for submission of bids is Jan. 8.
Earlier, another state-run trader, PEC, offered 190,000 tonnes of wheat in two global tenders.
These tenders are part of the South Asian nation's move to sell 2 million tonnes of the grain from overflowing government warehouses.
Madhya Pradesh is expecting wheat production to cross 190 lakh tonnes during the current Rabi season.
"The state is expecting an estimated wheat production of over 190 lakh tonnes. With this, the state would be able to surpass Punjab in the production of wheat," state's farmer welfare and agriculture development department director, Dr D N Sharma told PTI.
The farmers had sown wheat a bit in advance due to more than adequate rains, he said, adding that the production will also be helped by the intense cold prevailing now.
Last year, wheat was sown on 54 lakh hectares which led to production of 161.25 lakh tonnes of wheat. This year there is a target to sow wheat on 57 lakh hectares of land, Sharma said.
India's State Trading Corp has received the highest bid at $288.3 per tonne for its wheat export tender offering 200,000 tonnes, trade sources said on Monday, more than the government's floor price of $260 a tonne.
There were 10 bidders for the global tender, said one of the sources.
The state-run trader issued the tender last month offering the grain from government warehouses for shipment between Jan. 4 and Feb. 3 on the country's west coast.
Separately, the trading company has extended the deadline for bids for its 70,000 tonnes wheat export tender from the southern port of Chennai to Jan. 10, it said in a statement.
The tender is part of the Indian government's plan to sell 2 million tonnes of the grain overseas until March, as it attempts to trim bulging stocks.
Earlier, state-run MMTC Ltd received the highest bid at $283.11 a tonne for its wheat export tender from the east coast.
Egypt's General Authority for Supply Commodities (GASC) is to receive LE402 million ($58.1 million) from the finance ministry to import 180,000 tonnes of wheat, the ministry said on Sunday.
This raises the amount of funds allocated to the authority to LE12.4 billion ($1.79 billion) in the first half of the current financial year.
The resources were used in importing more than 2.5 million tonnes of wheat and 494,000 tonnes of table oils, the purchase of 135,000 tonnes of local oils as well as paying the dues of farmers and exporters amounting to LE300 million ($43.37 million).
“GASC currently consumes nine million tonnes [of wheat] annually to provide subsidized bread, of which 3.6 million tonnes are supplied by local farmers while the remaining 5.4 million tonnes are imported,” supply ministry spokesperson Mahmoud Diab told Ahram Online last month.
Diab pointed out that local farmers produce up to 8.5 million tonnes of wheat annually, roughly five million of which are sold to the private sector.
Self sufficiency in wheat for subsidised bread can be achieved by 2019 if Egypt raises its silo storage capacity by one million tonnes annually, the Egyptian agriculture minister told Reuters last month.
Sugar subsidies cost the finance ministry LE5.83 billion ($840 million) in the financial year 2012/2013 which have all been paid, added the statement.
The ministry also approved payment of LE300 million ($43.37 million) in dues to the Egyptian Sugar and Integrated Industries Company for the current financial year, thus raising the amount of money paid to the company during the current financial year to LE900 million ($130.11 million).
Total area under wheat crop has increased by 8 per cent to 273.97 lakh hectare across the states in the ongoing rabi season so far compared to 253.20 lakh hectare during the same period last season.
The total rabi-sown area, as per reports received from states, was at 536.37 lakh hectare in current season so far compared to 507.26 lakh hectares at this time last year, the Agriculture Ministry said in a release.
Sowing of rabi crops starts from the month of October. Bumper crop is expected this year due to good and prolonged monsoon, which will help in retaining soil moisture and support the sowing of rabi crops.
Agriculture Minister Sharad Pawar had also said that the foodgrains production this year is likely to break previous record of 259.29 million tonnes (MT) achieved in 2011-12 if weather remains favourable through the ongoing rabi season.
Among other rabi crops, pulses acreage has also marginally increased to 126.84 lakh hectare this season from 126.70 lakh hectare last year, taking advantage of rains.
Area under oilseeds has increased to 79.50 lakh hectares during the period from 76.30 lakh hectares last year.
Total area under rice sown in the rabi season has also risen sharply to 2.14 lakh hectares during the week ending today from 1.74 lakh hectares in the year-ago period.
However, the area under coarse cereals has decreased to 53.92 lakh hectares, from 54.81 lakh hectares a year ago.
The government has set a rabi production target of 92.50 MT for wheat, 12 MT for pulses, 14 MT for rice, 4.4 MT for maize and 1.5 MT for barley.
State-owned Food Corporation of India (FCI) is expecting to earn more than Rs 3,400 crore from wheat exports in the current fiscal.
In August, the CCEA had allowed 20 lakh tonne (LT) of wheat exports from FCI's godowns in 2013-14 fiscal through public sector trading firms such as STC, PEC and MMTC.
The tenders for export of 9.9 LT of wheat have already been floated by the three trading firms, of which tenders for about 4 LT have already been awarded.
"Looking at the international market scenario and bids received so far, we are planning to export the whole 20 LT wheat by March next year, expecting to earn more than Rs 3,400 crore," a senior FCI official told PTI.
He added that all the bids received so far were above USD 280 per tonne, with highest bid of USD 289.90 per tonne as against the floor price of USD 260 per tonne.
"Corporation hopes that the average price for export of wheat this year would be around USD 281 per tonne," he said.
The government had lowered the floor price for export of wheat this fiscal to USD 260 per tonne from USD 300 per tonne in 2012-13, and allowed to sell wheat in tranches till June next year.
Floor prices were reduced after other major exporters of wheat like the United States, Canada and Australia were selling the same quality of wheat in the range of USD 270-275 per tonne, the official said.
The government had allowed export of 4.5 million tonne wheat from FCI godowns during last fiscal through PSUs. Of that, PSUs sold about 4.2 million tonne at an average price of USD 311.38 per tonne, for over Rs 7,000 crore.
The FCI official added that international market is likely to be flooded with wheat from the US and Canada, "so we are planning to export the whole permitted quantity by the end of this fiscal only".
The government had decided to export wheat as the corporation had surplus stocks against the actual requirement.
Recently, a Parliamentary committee suggested that there is an urgent need to reduce the food subsidy burden and recommended that the government should fix upper limit for foodgrain storage.
FCI is the government's nodal agency for procurement and distribution of foodgrains.
India's state-run PEC Ltd has received the highest bid at $281.5 per tonne for its offer to export 70,000 tonnes of wheat from the country's east coast, trade sources said on Monday, higher than the government's new floor price of $260 per tonne.
PEC, which issued a tender last month offering the grain from government warehouses for shipment between Dec. 26 to Jan. 31, received six bids for the tender, the sources said.
The latest tender is part of the Indian government's plan to sell 2 million tonnes of the grain overseas until March to trim its bulging stocks.
Last week, two state traders including PEC sold a total of 210,000 tonnes.
Two Indian state-run traders received bids for wheat exports at prices above the government-set floor, trade sources said on Thursday, showing interest in purchases from the world's second-biggest wheat grower.
PEC Ltd and MMTC Ltd offered to sell a total of 210,000 tonnes in their latest export tenders as part of a government plan to allow overseas sales of 2 million tonnes by end-March.
PEC Ltd received the highest bid at $287 per tonne in a 35,000 tonne tender for shipment in January of supplies from the east coast. In another tender offering 120,000 tonnes from the west coast for shipment in January, PEC got the highest bid at $285.41 per tonne.
MMTC got the highest bid $283 a tonne in a tender offering 55,000 tonnes from the west coast for January shipment.
To make exports more attractive to the Middle East and neighbouring Bangladesh, India in October cut the floor price for the 2 million tonnes by $40 a tonne to $260.
Government-run warehouses are still overflowing, thanks to bumper harvests since 2007. India's wheat stocks stood at 31 million tonnes on Dec. 1, nearly three times the targeted level for end of the December quarter.
Last season, India exported nearly 4.5 million tonnes of wheat between August 2012 and March 2013.
Traders expect India to get good response in its next round of tenders.
"I see global interest in Indian wheat supplies remaining alive even for February shipments," said Tejinder Narang, an adviser at New Delhi-based trading company Emmsons International.
Traders said rival supplies from the Black Sea region were available at $285-$290 a tonne FoB, making Indian wheat attractive.
Last month, three government-backed traders, State Trading Corp., PEC and MMTC, sold a total of 340,000 tonnes via tenders, with PEC receiving the highest bid at $290 per tonne.
Buoyed by the better-than-expected response to recent wheat tenders, State entities such as MMTC, STC and PEC Ltd have invited bids to ship out 6.5 lakh tonnes more, probably the highest volume on offer in a month.
These tenders, which will be decided over the next 20 days, might pull down global wheat prices, analysts said.
PEC Ltd has invited tenders to ship out 1.2 lakh tonnes of wheat stored in Food Corporation of India (FCI) godowns at the Kandla Port.
It has also invited bids for 35,000 tonnes of wheat stored in Vizag port, while MMTC has offered to sell 55,000 tonnes stored at Pipavav port.
These tenders would be opened on December 12, and the wheat has to be shipped between December 22 and January 25.
PEC will also open tenders for 70,000 tonnes of wheat being offered from Krishnapatnam port on December 16.
STC has invited tenders for 2 lakh tonnes to be shipped out from Mundra Port and 70,000 tonnes from Chennai port, while MMTC has offered to sell 1 lakh tonnes stored at Kakinada.
The STC and MMTC tenders will be opened on December 23.
This huge volume on offer indicates that pressure is building up on the State agencies not only to create storage space for the new crop, but also to take advantage of current global prices.
Analysts said these tenders may attract bids from more buyers, as wheat availability from Russia and Ukraine will be lower on account of snow.
In the bids opened a fortnight ago, buyers quoted up to 10 per cent higher than the floor price of $260 a tonne, largely in line with the prevailing global price.
On October 30, the Government had cut the floor price for wheat exports by $40 a tonne to $260 to make the wheat shipments more viable in the global market after the state entities received poor response to export 1.6 lakh tonne last month.
The Government has decided to ship out about 2 million tonnes of wheat to cut surplus stocks and create space for other cereals, such as rice, for which paddy procurement is currently on in States such as Punjab and Haryana.
On November 1, wheat stocks stood at 34 million tonnes, three times more than the target for the October -December quarter.
The State entities had exported 4.2 million tonnes of wheat in 2012-13 fiscal and the value of these shipments was $1.4 billion.
The average price fetched by the Indian wheat stood at $311.38 a tonne last fiscal.
This year, global cereal output is likely to touch an all-time high, owing to favourable climatic conditions and an improvement in seed and soil fertility.
Data compiled by the Food and Agriculture Organisation (FAO) of the United Nations show cereal output may stand at 2,500 million tonnes (mt) this year, 8.4 per cent higher than last year and six per cent more than the previous record in 2011. In a report, Crop Prospects and Food Situation, FAO estimated this year, wheat production would rise 7.8 per cent, coarse grains 12 per cent and rice one per cent.
Prospects for the winter wheat crop already planted in the northern hemisphere, to be harvested in 2014, are favourable. Major producers likely to record increased wheat acreage are the European Union, China, the US and India, Russia and Ukraine are estimated to report lower acreage. World stocks are estimated to rise to 572 mt by the end of the 2014 crop season, an annual rise of 13.4 per cent. The forecast is nine mt higher than the forecast in November.
The sharp rise in global cereal stocks would result in the global cereal stocks-to-use ratio of 23.5 per cent. The historical low of 18.4 per cent was registered in 2007-08.
While global cereal production was expected to rise, FAO warned food security conditions in several parts of Africa, as well as in other regions, were deteriorating. In the Sahelian countries of west Africa —Chad, Mali, Mauritania, Niger and Senegal — crops and pastures were affected this year by the late onset and early cessation of rains. This could lead to a surge in food insecurity and malnutrition in the 2013-14 marketing year.
In Central African Republic, 1.3 million need emergency food assistance due to the civil unrest there.
In November, the FAO Food Price Index remained stable---it averaged 206.3 points, almost unchanged from 206.6 points in October, though 9.5 points (4.4 per cent) below the figure in November 2012. Last month, a sharp decline in sugar prices nearly offset the rise in oils. Though cereals averaged slightly lower, meat and dairy product prices were stable. The index measures the monthly change in the international prices of a basket of five commodity groups, including 73 price quotations.
Public sector trading firms STC, PEC and MMTC have floated global tenders for the export of 1.95 lakh tonnes of wheat from overflowing government godowns.
This is the second round of bids for export of wheat procured by the Food Corporation of India (FCI) after the government lowered the floor price to USD 260 per tonne from USD 300 per tonne on October 30 to boost shipments.
State Trading Corporation of India Ltd (STC) and PEC Ltd have each invited bids for the export of 70,000 tonnes of wheat, while MMTC has sought bids for 55,000 tonnes.
The MMTC offer will close on December 12 and the PEC and STC tenders on December 16 and December 23, respectively. The shipments are scheduled between December and February.
According to the tender documents, STC is offering wheat from FCI stocks at Chennai port, MMTC from Pipavav port and PEC from Krishnapatnam port. The grain is of the current year.
In the first round of tenders for the export of 3.4 lakh tonnes of wheat from FCI godowns, the PSUs received bids in the range of USD 284.7-289.9 per tonne, which were higher than the base price.
The government plans to sell 2 million tonnes of wheat from FCI's surplus stock in tranches by June. The Corporation had 36 million tonnes of wheat as of October 1 compared with the actual requirement of 21.1 million tonnes.
In 2012-13, the government earned USD 1.4 billion from the export of 4.2 million tonnes of wheat by PSUs. Indian wheat fetched an average price of USD 311.38 per tonne in the previous financial year.
The sowing of wheat in Uttar Pradesh (UP), one of India's largest producing states, had reached a five-year high of almost 6.38 million hectares till Thursday, despite widespread agitation over sugarcane prices leading to the popular notion that there were still standing cane crops on vast areas of land.
According to latest data furnished by the department of agriculture, wheat had been sown on 6.38 million hectares till November 28, almost 17 per cent more than the corresponding period last year.
Wheat is usually planted on 9.4 million hectares in UP in the entire season, of which sowing had been completed in almost 68 per cent area till Thursday. It is on track to reach the targeted 9.73 million hectares in UP.
"This has raised some questions over the claim that farmers have delayed wheat sowing in the state due to the sugarcane agitation," a senior official said. Uttar Pradesh, along with Punjab, Haryana and Madhya Pradesh are the main wheat-producing states of the country.
Millions of farmers across most parts of UP have been on the warpath since the last few days because of a tussle with millers over sugarcane prices for the 2013-14 season.
The crises deepened after more than 70 of the 99 private sugar mills in the state suspended operations because of mounting losses made more acute by unrealistic sugarcane prices fixed by the state government.
Overall, data showed that wheat, which is the biggest foodgrain grown during the rabi season, has been planted in 17.94 million hectares till Thursday across the country, almost 13.2 per cent more than that during the corresponding period of the previous year. The biggest increase in acreage has come from Madhya Pradesh, apart from Uttar Pradesh.
"We are expecting a bumper wheat harvest in 2014-15, which could exceed the hitherto all-time high production of 95 million tonnes," another official said. He also said brimming reservoirs and an extended southwest monsoon had provided enough moisture to the soil for a good harvest.
The Commission for Agriculture Costs and Prices in a recent report pegged India's agriculture growth in 2013-14 (June-July) at 5.2-5.7 per cent against 1.9 per cent last year.
Among other crops, the data showed that the sowing of pulses had been completed in 10.49 million hectares till Thursday, against 10.24 million hectares in the same period of the previous year, while oilseeds had been planted in 6.99 million hectares, almost 4.48 per cent more than that during last year.
India's State Trading Corp has issued two global tenders to export a total of 270,000 tonnes of wheat for shipment between Jan. 4 and Feb. 3, company statements showed on Thursday.
The state-run trader is offering 200,000 tonnes at Mundra port, on India's west coast, and the rest at the southern port of Chennai.
The deadline for submission of bids in both the tenders is Dec. 23.
Earlier, another state-run trader MMTC Ltd offered 100,000 tonnes on the east coast in a similar tender.
India will become the third-biggest economy in the world by 2030, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said today.
"By the year 2030, India will have the third-largest GDP in the world. China will be No. 1, the US will be No. 2 and India will be third," he said in a speech delivered at the convocation of the 125th course of the National Defence Academy at Khadakwasla near here.
"The challenge of defence forces is to defend and protect the interests of the nation that will have the third-largest GDP in 17 years. When the size (of the economy) increases, the challenge also increases," he said.
Underlining the importance of safeguarding India's access to energy supplies in the context of West Asia, he said, "Our oil import dependence will increase, especially if our growth rate and GDP go up."
Ahluwalia said "the real challenge for us is to redefine the defence challenge we face in a world which will be much more multi-polar."
India, with a GDP of $1.84 trillion, was ranked the 10th-largest economy in 2012, according to the World Bank. The US, at $15.6 trillion, is the largest economy.
With elections in mind, the Cabinet Committee on WTO-related matters, chaired by Prime Minister Manmohan Singh, has apparently given the mandate to Commerce and Industry Minister Anand Sharma to take a tough stand on India's strategy at the coming ninth WTO Ministerial Conference (MC9) in Bali, Indonesia.
Although it has decided to agree to an interim measure that will remove the limit on food subsidies, it will seek "binding commitments" from developed countries to continue with the adhoc agreement until a permanent solution is fully achieved.
It seems on the much controversial peace clause (PC) or due restraint clause under the chapter of Public Stockholding For Food Security Purposes, the government had decided to take a position wherein it would seek an interim measure until a permanent solution was achieved to remove the cap on food subsidies for farm support, sources told Business Standard.
In the final draft of the negotiating texts circulated by WTO Director-General Roberto Azevêdo to all the 159 trade ministers from member countries, it has been suggested that the PC will be valid until the 11th ministerial, which is expected to take place in 2017 and that a permanent solution on the matter will only be taken after the conference in Bali.
However, the government has now decided that though it will agree to an interim measure, it will ask WTO members to retain its validity until a permanent solution has been "agreed and delivered" by all members, especially by the US and EU, irrespective of which ministerial conference it is going to be.
While the government is not opposed to the decision of the WTO Trade Negotiations Committee of considering a permanent solution later, it wants the matter to be granted topmost priority in the post-Bali agenda.
Additionally, it was also decided in the Cabinet on Thursday that during the Bali meet, India will also ask for "complete immunity" on the PC from any sort of challenge or dispute. According to the final draft negotiating text by the WTO Trade Negotiations Committee, members will not challenge those countries which will provide those agricultural subsidies for farm growth, currently prohibited under the Agreement on Agriculture (AoA) of the WTO.
But, the Cabinet decided that India will seek to get the PC immune from trade disputes also under the Agreement on Subsidies and Countervailing Measures (ASCM), which is not the case at present.
Finally, the government has said until all these demands are accepted in Bali, it might not be able to grant its consent for the trade facilitation agreement (TFA) that sought to simplify customs rules globally, which was something that the developed countries were pushing for a long time.
This is for the first time that the government is facing a WTO ministerial with general elections just few months away.
The MC9 is scheduled to take place from December 3 to 6 at the Bali Nusa Dua Convention Centre.
India's state-run trader MMTC Ltd has issued a global tender to export 100,000 tonnes of wheat for shipment between Jan. 4 and Feb. 3, the company said in a statement on Thursday.
The stocks would be available at Kakinada port, on India's east coast, and the deadline for submission of bids is Dec. 23, the statement said.
Japan's agriculture ministry said it received no bids for the import of wheat for livestock feed use and feed-quality barley in a tender that closed late on Wednesday.
The bureau had sought as much as 120,000 tonnes of feed-quality wheat, and 200,000 tonnes of barley for livestock use, via a simultaneous buy and sell (SBS) auction that is usually conducted weekly.
It is seeking the same amounts for each grain in a similar tender that will be held on Dec 4.
Japan buys a small portion of feed wheat and barley via so-called SBS auctions, in which end-users and importers specify the origin, price and quantity of grain, allowing millers to meet their varied needs for the feed grain.
Bangladesh's state grains buyer has issued an international tender to buy 50,000 tonnes of wheat, the latest in a series of tenders as the country looks to replenish reserves, a procurement official said on Monday.
The imports are part of a plan by the Directorate General of Food, the state agency, to ship in 850,000 tonnes of wheat in the current financial year, up from around 350,000 tonnes the previous year.
The deadline to submit offers under the latest tender is Dec. 5, with validity up to Dec. 15, and the wheat is to be shipped within 40 days of signing the contract, said Mohammad Badrul Hasan, procurement director at the purchasing agency.
The state grains buyer has so far purchased or agreed to buy 250,000 tonnes in tenders. The government is also buying 200,000 tonnes of wheat in a government-to-government deal with Ukraine at $307 a tonne, CIF liner out.
The government imports wheat to run welfare programmes for the poor and to keep domestic prices stable. Its reserves have dropped to around 1 million tonnes from 1.4 million tonnes a year earlier.
In the previous financial year ended in June, the state grains buyer could not achieve its import target of 800,000 tonnes mainly because traders failed to supply wheat on time.
For this year, it has introduced tougher delivery rules to ensure supplies are delivered on time by the winning bidder.
Apart from the government, private traders also import about 2.5 million tonnes of wheat a year to help to meet local demand of 4 million tonnes.
Domestic output amounts to about 1 million tonnes.
Wheat consumption is rising in Bangladesh in line with steady economic growth and changes in lifestyles, though rice remains the staple food for its 160 million people.
After a near two-year hiatus, Iranian private buyers are inquiring about purchasing 300,000 tonnes or more of milling wheat, signalling that a deal on Tehran's nuclear programme over the weekend is having an effect, European traders say.
One trader said up to 500,000 tonnes may be being sought by Iranian private interests.
Trade disruption caused by western sanctions over Iran's nuclear activities meant Iranian wheat buying has been concentrated almost entirely in the hands of the state purchasing agency, the Government Trading Corporation (GTC), with private buyers absent from international markets.
But the breakthrough deal between world powers and Iran over the weekend will halt Iran's most sensitive nuclear activity and suspend sanctions by the United States and the European Union on several sectors of Iran's economy for an initial six-month period.
While sanctions have not targeted food or animal feed shipments, financial measures froze Iranian companies out of much of the global banking system, which has hindered deals for food imports.
"Iranian private wheat importers apparently believe the sanctions deal at the weekend could open the international banking system to them again pretty rapidly," a trader said.
"I received a large number of inquiries about buying wheat from private Iranian interests today largely for February/March (2014) shipment."
Traders said the new private inquiries were separate from an inquiry to buy about 300,000 tonnes made by the GTC and reported on Nov. 4.
Unconfirmed market talk was that the GTC has bought an unknown volume of the Nov. 4 inquiry, although not the full amount.
"I have not actually seen any purchases by the private sector yet as the formal administrative process of lifting the banking sanctions could take several weeks in most countries," another trader said.
One European trader said it could be at least a month before international banking services for Iranian wheat purchases are normalised.
"In anticipation of money being available I think a lot of the privates will get into the trade," the trader said. "I'm not sure how many (trading houses) will be willing to sell without seeing the liquidity or the funds being made available but I think it's just a matter of time."
He said it could take time for the private sector to negotiate trade credit facilities with banks, meaning the Iranian state may have to continue to carry the main import burden in the near future.
India's government-backed trader PEC Ltd issued a global tender to export 70,000 tonnes of wheat for shipment between Dec. 26 and Jan. 31, a company statement showed on Monday.
The stocks would be available at Krishnapatnam port, on India's east coast, and the deadline for submission of bids is Dec. 16, the statement said.
On Nov. 21, another state trader, MMTC Ltd , issued a tender to export 55,000 tonnes of wheat for shipment between Dec. 22 and Jan. 25.
Export tenders are part of India's move to sell 2 million tonnes of wheat from overflowing government warehouses.
While the Punjab Agricultural University (PAU) has been recommending bed planting, a system of wheat cultivation, many progressive farmers of the Malwa region have started adopting the new technique.
The union ministry of water resources has constituted a Central Ground Water Board (CGWB) for carrying out nationwide surveys on ground water resources and guiding the states appropriately in scientific and technical matters relating to ground water.
The Punjab agriculture department has started organising block-level meetings and training camps to create awareness as well as to educate farmers and public about the situation of ground water resources across the Malwa belt.
According to information, in Moga district it has been proved that bed plantation can be more rewarding than traditional farming. Interestingly, many farmers have saved groundwater and earned extra money by adopting bed plantation method for wheat cultivation in the region.
Three out of five revenue blocks of the district, including Moga-1, Nihal Singh Wala, Moga-2 and its adjoining areas, had already been declared 'dark zones' by the CGWB, due to fast depletion of the water table.
Agriculture experts state that to prevent water table from depleting further farmers should adopt new technologies developed by PAU such as bed planting in wheat and other crops, use of laser leveller, tensiometer-aided irrigation, ridge planting in cotton and drip irrigation in fruit crops that save water to varying degrees.
"Bed plantation can be very successful technique for saving water along with intercropping and crop diversification. Sowing wheat on beds recorded significantly higher grain and straw yield as compared to conventional method. This planting system facilitates mechanical weed control, improves water as well as fertiliser use efficiency, reduces crop lodging and lowers seeding rates," said agriculture experts.
Agriculture development officer (ADO) Jaswinder Singh Brar while demonstrating bed plantation technique with a bed planter at the state government's seed farm at Raunta village said the furrow irrigated raised bed system (FIRBS) of wheat sowing is a relatively new technology in India, wherein the wheat sowing is accomplished in two or three rows on raised beds.
"Farmers can get extra income from additional mentha crop sown in mid-January between beds in wheat crop. By adopting bed plantation method, 35-40% irrigation water is also saved. Bed plantation helps use chemical fertiliser in a better way as the plant roots are more concentrated," said the ADO.
The agriculture officer added that, "Using simple and effective technique of planting wheat, maize and legume crops on raised beds, farmers are getting more crops per crop and can reduce irrigation requirements by up to 35%. The experimental results indicated that FIRB technique is not only save water, nutrients and labour but also facilitates diversification of the rice-wheat cropping system and improve the physical properties of soil. This method has been evolved to economise irrigation water in which raised beds of prepared to accommodate three rows of wheat between two furrows.
Moga deputy commissioner Arshdeep Singh Thind said, "Farmers should adopt improved technology along with improved agronomic strategies, which will help save underground water." By bed-planting system a farmer can get better yield out of medium to heavy soil with efficient use of inputs such as water, fertiliser, seed, weedicide to enhance productivity, he added.
Buoyed by the strong response to its attempt to sell wheat from state-run warehouses, the government is planning to open a series of such export tenders in the months of January, February and March to sell a total of around 2 million tonne of wheat in the overseas market.
Tuesday, state-owned trading firms--State Trading Corporation(STC), Metals and Minerals Trading Corporation (MMTC) and PEC Ltd-- received bids in the range of $284.7-289.9 per tonne for shipment of 0.34 million tonne from the Food Corporation of India (FCI) godowns.
The highest quotations received by the three state trading firms were higher than the government's floor price of $260 per tonne for export of the FCI-procured wheat.
“In the subsequent tenders, the quantity offered will be more as we expect to get good price in coming months as well,” a senior government official said.
Government had to lower its base price for export of wheat from $300 per tonne to $260 per tonne after its attempt to export 0.15 million tonne of wheat was cancelled as the bids received were much lower than the base price.
“We were hoping to get a price of around $270-275 per tonne, but the price quoted (around $290 per tonne) is unexpected, which shows that Indian wheat has started commanding a premium in the international markets,” the official said.
He said the price received was even more than that quoted by Black Sea wheat, which is one of the most valuable wheat brands in the world market.
“In the coming months too, the trend is expected to be maintained because as per information the Australian wheat crop is not as good as expected, which will enable us to sell more in the overseas markets,” he added.
He said exporting wheat was more profitable for the government than selling it domestically as average global price of $285 per tonne will fetch Rs 18,000 for each tonne of wheat to the kitty, while the exchequer gets just Rs 16,000 per tonne in home market.
In 2012-13 fiscal, the government had earned $1.4 billion from export of 4.2 million tonne of wheat by PSUs. Indian wheat had fetched an average price of $311.38 per tonne last fiscal.
India is exporting wheat from state-run warehouses as consecutive years of bumper harvest have filled them to the brim.
According to FCI, wheat stocks in state godowns are estimated to be over 34 million tonne as on November 1 as against a requirement of just 14 million tonne.
India's state traders received bids above the floor price for wheat exports, trade sources said on Monday, reflecting good response after a cut in the floor price intended to boost shipments from the world's second-biggest grower.
Last month, India cut the floor by $40 a tonne to $260 for supplies from government stocks, to make exports more attractive to the Middle East and neighbours such as Bangladesh.
The three state-run trading companies had all failed to sell in the last round of global tenders in October, when the $300 floor made Indian wheat expensive in comparison to rival supplies from the Black Sea.
In Monday's tenders, PEC Ltd received the highest bid at $290 per tonne for its offerings on the west coast for shipment in December, while State Trading Corp. (STCI.NS) and MMTC Ltd (MMTC.NS) recorded bids of $286 a tonne in their respective tenders.
"Indian supplies have become on par with Black Sea origin," said Tejinder Narang, adviser at New Delhi-based trading company Emmsons International.
Traders said supplies from the Black Sea were available at $280-$290 a tonne FoB.
They said Indian wheat was benefiting from expectations that global prices would rise next year as supplies from the Black Sea fell.
The Indian government stuck to its floor price of $300 until last month after managing to export nearly 4.5 million tonnes between August 2012 to March 2013 as part of its strategy to cut huge stockpiles.
On November 1, India's wheat stocks stood at 34 million tonnes, three times more than the target for the Oct-Dec quarter.
The high level of stocks at government warehouses, boosted by a series of bumper harvests since 2007, has forced the state-run Food Corporation of India (FCI), the main grain procurement agency, to store wheat under tarpaulins.
Punjab and Haryana are eyeing wheat output of 278 lakh tonnes for Rabi season 2013-’14, from November to April, with experts saying that conducive weather conditions at the time of sowing may push overall yield of the crop.
As crop sowing is going on in full swing in both the agrarian States, it may get delayed in Basmati growing areas, they said. However, acreage under winter crop in both the States is expected almost at the same level as it was in last season. Punjab, major producer of wheat, is targeting more than 150 lakh tonnes (LT) of wheat production for the current season as against 165.91 LT last season. “The state has set a target of achieving more than 150 LT of wheat,” said a senior official of Punjab Agriculture Department.
Area under wheat has been proposed to be brought down to 34.80 lakh hectares as against 35.12 lakh hectares in last season. “Wheat is projected at 34.80 lakh hectares this year,” he said. The neighbouring state Haryana has fixed a target to achieve production of 127.48 lakh tonnes in comparison to 113.42 lakh tonnes achieved in last season. “Area under wheat in Haryana is targeted at 25 lakh hectares as against wheat area of 24.97 lakh hectares witnessed in last season,” an official said.
“The overall weather conditions have been conducive so far in Punjab and Haryana for wheat sowing which will be good for overall wheat production,” said Karnal-based Directorate of Wheat Research Project Director Indu Sharma. However, she said that sowing may get delayed where basmati was grown. Moreover, untimely rains last month in Punjab which delayed paddy harvesting have also caused some delay in wheat sowing. As wheat sowing going, 73 per cent of targeted area in Punjab has been completed while 60 per cent area in Haryana has been covered. “About 25.20 lakh hectares have been brought under wheat in Punjab so far which is more than 21.92 lakh hectares in corresponding period last year,” an official said.
Introduced for trials in Punjab two years ago on a few hundred hectares, it has this season gone on to occupy around 70 per cent of Punjab's total wheat production area of around 35 lakh hectares. Wheat variety HD 2967 has won the hearts of Punjab farmers. The government is making the seed available to farmers to meet the high demand.
According to experts, the reasons for its popularity are many, including its ability to withstand a wider temperature range, and its resistance to yellow rust disease. The variety gives the highest yield, up to 21.4 quintals per acre against 20 quintals/acre for other varieties. Also, it is shorter, which prevents it from falling during strong winds, a common sight just before harvesting.
The state, which had received only 300 quintals of HD 2967 seed approved by the Indian Agriculture Research Institute (IARI) for replacing other popular varieties such as PBW-342 in November 2011, has supplied over one lakh quintals this year.
"We expect around 70 per cent farmers in Punjab will end up sowing HD 2967 as there is a huge demand and we are committed to meeting this demand," says joint director, Food Security Mission ( Punjab), Dr Gurdial Singh, adding around 1 lakh quintals was supplied by Punseed, Punjab government's seed selling agency, while Krishi Vigyan Kendras and other government agencies such as Punjab Agro are arranging seeds for farmers.
There are many Punjab government-certified private players who supply this seed to farmers. After this variety was introduced in 2011, nearly 15 per cent of the wheat production area came under it in 2012. This year there has been a fourfold increase, says Dr Gurdial.
The high demad comes despite the fact that it commands the highest rate —Rs 2,485 per quintal, Rs 300 to Rs 500 higher than for other varieties — and the Punjab government has been granting farmers a subsidy of Rs 500 per quintal, says S S Kandhari, joint director (administration), Punjab agriculture department, with additional charge of general manager, Punseed.
Punseed is selling seeds worth over Rs 20 crore, sources say. Kandhari says 50,000 quintals of HD 2967 was produced by Punseed from its certified farmers, over 41,000 quintals was procured from private certified agencies, while 7,000 quintals was provided by Punjab Agricultural University.
He says the seed will be distributed through sale centres of the agriculture department, Punjab Agricultural University, Punseed, Punjab Agro, KRIBCO and IFFCO. "Also, PAU got the seed prepared from its Krishi Vigyan Kendras and sold directly to farmers in Kisan melas," says Dr H S Randhawa, director (seed), PAU.
"Fluctuations in temperature during flowering season have become regular now and the HD 2967 variety is suitable in such fluctuations," says agriculture director Dr M S Sandhu. "Unusually high temperatures and rain during March and April led to large-scale adoption of this temperature-tolerant variety by farmers," he adds.
According to the chief agriculture officer, Jalandhar, Dr Swatantar Aery, the demand for HD 2967 has been so high that over 60 per cent of the total area in the district was sown under this variety.
"We have provided around 22,000 quintals seed of all varieties to farmers, mostly HD 2967, and even then farmers have procured more from authorised private sellers. We are keeping a close watch on demand so that the district will not fall short of seeds at the end of the sowing season," he adds.
HD 2967 boasts a good grain quality that is ideal for chapatis, and ripens in 157 days, Aery says.
Dr Naresh Gulati, deputy director, Agriculture Technology Management Agency, says, "At camps we organised, every farmer was demanding HD 2967 since to them yield matters than anything else. By next year, we hope it would cover 80-90 per cent of Punjab's area under wheat."
Two other varieties are considered very good by experts: PWD 550 ( a late variety sown in December) and PBW 621, both introduced by the university. Punseed provides 25,000 qunitals of PBW 550 seed and 20,000 qunitals of PWD 621. Dr Sandhu says these varieties too are very good and have been a hit among farmers.
India’s three state-owned traders have deferred the closing date for bids to export a total of 340,000 tonnes of wheat from government warehouses for shipment by December due to a public holiday, traders said on Tuesday.
State Trading Corp, MMTC Ltd and PEC Ltd will now close the bid on 18 November instead of 15 November.
The companies are offering the quantity at a floor price of $240 per tonne as part of the latest round of global export tenders.
STC is offering 120,000 tonnes on India’s west coast, MMTC 60,000 tonnes on the east coast, while PEC is offering a total of 160,000 tonnes on both the coasts.
Farmers have planted wheat in 15.19 lakh hectares so far in the ongoing rabi (winter) season, more than double the area covered a year earlier, the Agriculture Ministry said today.
Wheat was sown in 6.46 lakh hectares in the same period last year, latest government data showed. Sowing of wheat, the main rabi crop, starts at the end of October and harvesting begins in April.
"Area under the crop is more as of now because of better soil moisture following late rains in key growing states like Punjab," said Agriculture Commissioner J S Sandhu. "Total wheat acreage could increase by 1 million hectares this year to 29 million hectares if weather situation remains conducive for crop growth till March."
Wheat production may surpass the previous record of 94.88 million tonnes in 2011-12 if suitable weather conditions prevail, Agriculture Secretary Ashish Bahuguna said yesterday. The wheat acreage in 2011-12 was 29 million hectares.
According to the ministry, farmers have planted pulses in 37.78 lakh hectares so far as the prolonged monsoon brightened sowing prospects in the southern states. Last year, planting of pulses hadn't started at this time.
The area under oilseed planting has increased to 28.89 lakh hectares so far in the rabi season from 22.36 lakh hectares in the year-ago period.
However, the acreage under coarse cereals lagged behind at 25.87 lakh hectares compared with 31.63 lakh hectares.
Among cash crops, sugarcane planting was covered in 81,000 hectares so far this rabi season, as against 45,000 hectares a year earlier.
The total area under all rabi crops stood at 108.88 lakh hectares compared with 61.20 lakh hectares in the year-ago period.
The government has set a rabi production target of 92.50 million tonnes for wheat, 12 million tonnes for pulses, 14 million tonnes for rice, 4.4 million tonnes for maize and 1.5 million tonnes for barley.
The country's wheat production this year is likely to surpass the previous record of 94.88 million tonnes on better coverage and good weather condition, Agriculture Secretary Ashish Bahuguna said today.
Production of gram, mustard seed and barley output may also exceed the previous record if farmers receive one-two good spells of rains next month, he added.
India, the world's second-biggest wheat grower, had produced a record 94.88 million tonnes of wheat in the 2011-12 crop year (July-June), buoyed by a good monsoon. Poor rains in 2012-13 lowered the output to 92.46 million tonnes.
"As of now, rabi (winter) crop prospect is very good. Weather condition, soil moisture and water levels in reservoirs is better and ideal for wheat and other rabi crops. If weather condition remains good throughout, wheat production should be a record this year," Bahuguna told PTI.
Although wheat sowing has been slightly delayed but area coverage so far has been better than last year, he said.
According to official data, wheat has been sown in 4.15 lakh hectares till last week, as against 83,000 hectares in the same period last year. Total area sown for all rabi crops has also increased to 65 lakh hectares, which is three times higher than achieved during the same period of last year.
Wheat is a major Rabi crop sowing of which begins from October end and harvesting from April.
Bahuguna said: "There will be more area under wheat and other crops. Yields are also expected to be better with adoption of better varieties. But we have to see weather condition in March, which would be crucial for wheat crop."
As far as other crops are concerned, he said, "If we get one or two spells of rains in December, then definitely it would be a record crop for mustard, gram and barely also."
The government has set a rabi production target of 12 million tonnes for pulses, 14 million tonnes for rice, 4.4 million tonnes for maize and 1.5 million tonnes for barley.
India's move to cut wheat export prices has curbed a rally in U.S. wheat futures and cheap cargoes are expected to enter the market after tenders this month, but that is unlikely to erode premiums for higher-quality Australian supplies.
Traders say the Indian supplies will go largely into animal feed or to fill demand for lower-quality milling wheat, while Australian wheat will take care of higher-end demand for making noodles, bread and cakes.
Expectations that India would open the floodgates for wheat have reversed gains in Chicago Board of Trade futures, which have lost more than 8 percent since hitting a near-five-month high of $7.11-1/4 a bushel on Oct. 21.
The spot-month December contract was trading at $6.54-1/4 a bushel at 0640 GMT on Thursday.
"Australia is not expected to have large volumes of feed wheat this year although they have yet to go through the crucial harvest season," said one Singapore-based grains trader. "Indian wheat is going to be selling at a discount to U.S. soft red winter wheat and Black Sea wheat."
Australian wheat prices have held up thanks to strong demand led by China, which saw some 16 percent of its crop damaged by adverse weather earlier this year.
Australian prime wheat was quoted this week around $290 a tonne, free on board, while prime hard wheat with 13 percent protein was being offered around $351 a tonne.
"They probably won't steal a lot of business away from Australia. Indian wheat will enter the feed market while even our lower-quality Australian standard wheat will be bought by flour millers," said Andrew Woodhouse, a grains analyst at Advance Trading Australasia.
INDIAN TENDERS IN FOCUS
On Oct. 30 India cut the floor price for exports of 2 million tonnes of wheat from government warehouses by 13 percent to $260 a tonne..
The three state-run traders will now test the water on Nov. 14 when bids close for the first round of tenders since that price cut, aimed at boosting shipments from the world's second-biggest producer of the grain.
Traders believe India will get a strong response.
"After a long time, Indian wheat will be competitive in the world market, thanks to the decision of the government to lower the floor price for exports," said a New Delhi-based trader at a global trading company.
"Those buying Russian wheat could turn to India," he said.
India is likely to sell up to 2 million tonnes of wheat in the first quarter of 2014, mainly to buyers in the Middle East and Southeast Asia, traders said.
"Right now Indian wheat is the cheapest in the market as not much is being offered from Russia and Ukraine," said a second Singapore trader. "Importers are likely to bid for Indian wheat at around $275-$280 a tonne."
In Sept. 2011 India allowed private traders to export wheat again, lifting a four-year ban on overseas shipments of the grain. The government later allowed exports from its own warehouses to help cut stocks lying in open fields.
Since then private traders have exported about 4 million tonnes, while exports from government warehouses have been nearly 4.5 million tonnes. Global wheat trade stands at around 150 million tonnes a year.
Indian wheat is similar to Australian standard, U.S. soft red winter and Black Sea varieties of wheat.
Australia is this year set to produce its fourth-largest wheat crop, beating government predictions, with dry weather in parts of the country's eastern grain belt boosting quality by helping to produce higher protein scales.
The country's wheat production will rise 14 percent to 25.3 million tonnes in 2013/14 from 22.1 million last year, according to a Reuters survey of 11 analysts and traders.
Farmers kicked off the harvest in the eastern grain belt last month and more than half of the crop harvested so far has at least 13 percent protein content.
The bulk of Indian wheat has 10-11 percent protein but the stocks about to hit the market have been held in government silos for years, raising questions over quality.
Food Corporation of India, the government’s grain procurement and management agency, is set to float a revised tender on November 15 for its proposed two million-tonne wheat export, with a $40/tonne cut in floor prices.
The first tender, floated in August by three government agencies — MMTC, STC and PEC — for the FCI wheat had a floor price of $300 a tonne, almost equivalent to the average realisation in the 4.2 mt of export last year. It got no bids at that price, as the open market global price was much lower, around $235 a tonne at the benchmark Chicago Board of Trade (CBoT).
Global bidders did offer $240-260 a tonne. Conse-quently, the Empowered Group of Ministers (EGoM) which approved the earlier decision had, late last month, decided to cut the floor price for wheat export to $260 a tonne.
“Even this price level is not attractive. But, we have little choice. The price is decided by the EGoM, which thought to fix the floor price at the highest on the graph,” said a senior FCI official.
Wheat prices have been very volatile so far this financial year. After hitting $265.17 a tonne ($7.22 a bushel) on April 30 at the CBoT, wheat for near-month delivery fell to $230.82 a tonne ($6.28 a bushel) on August 13. After a resurgence to $259.29 a tonne ($7.06 a bushel) on October 18, it was trading on Wednesday at $242.1 a tonne ($6.59 a bushel).
The current price translates into Rs 15,085 a tonne or Rs 1,508.5 a quintal in rupee terms. For delivery late this month, it is quoting at Rs 1,626 a qtl on the National Commodities & Derivatives Exchange (NCDEX).
To make this attempt successful, FCI is focusing on special cleaning of wheat, to improve its quality. “We procure wheat at a machine-cleaned fair average quality. We are cleaning it again, for higher realisation,” said the official.
While India's overall exports are only now beginning to rise, after months of shrinking, farm exports have been rising steadily, and dramatically, with each passing year. In just the last four years, farm exports have risen from $14.3 billion in 2008-09 to $31.9 bn in 2012-13. Their share in India's total exports has risen from 7.2 per cent to 10.6 per cent in the same period, and to 10.8 per cent in the April to August period this year. Indeed, while it is a common belief that India's farmers are slow to change, apart from being inefficient, none of this is true. As it became evident that Bt cotton raised productivity significantly, most farmers switched to it — as a proportion of the total crop, it rose from nearly zero in 2001-02 to over 81 per cent by 2007-08, as a result of which India is the world's second-largest exporter of cotton. When hybrid maize offered a similar jump in productivity, farmers took to it in a big way.
From around 5 per cent in 1990-91, the farm sector's internationalisation — loosely measured by the sum of farm imports and exports as a proportion of farm GDP — rose to 18 per cent by 2011-12, not quite the picture of either a backward or an inward-looking farm sector. None of this, needless to say, could have taken place had the sector been, as is often portrayed, starved of investments. After stagnating at around 8-9 per cent of agri-GDP in the 1980s, farm investments are up to over 20 per cent.
India's relative inequalities — Punjab's wheat yields are 4,415 kg per hectare as compared to Bihar's 1,946 kg per hectare — suggest that the scope to increase exports is large. Significantly, there is great scope for growth in the next few months. In the case of wheat, where exports touched $2 bn in 2012-13, India is competitive, given current global prices. Juxtapose this with the FCI sitting on grain far in excess of what it needs and with enough storage capacity to keep just around 60 per cent of this safe — the rest is under tarpaulins in open fields. So, exports of wheat can easily jump to $3 bn this year, according to estimates by the CACP chief, Ashok Gulati. Instead, as global prices fall, the government is slow to cut prices, the opportunity is being frittered away — in the absence of adequate storage facilities, it is likely the grain will rot.
Acreage of wheat, a major rabi (winter-sown) crop, rose by five times to 4.15 lakh hectares from 0.83 lakh hectares in the year-ago period, on account of good monsoon.
Area under rabi crops has also increased by three times to 64.77 lakh hectare so far this season.
"As per preliminary reports from States on the progress of sowing of rabi crops, the sowing has been very brisk in the last one week. Nearly 65 lakh hectare area has been sown so far as compared to 21 lakh hectare at this time last year," the Ministry said in a statement.
Sowing of rabi crops start from the month of October, and bumper crop is expected this year due to good and delayed monsoon which will help in retaining soil moisture and support the sowing of rabi crops.
Pulses farmers also took up sowing in a big way taking advantage of rains. As a result, the acreage has whopping increased to 20.47 lakh hectare, whereas last year at this time pulses were not sown.
Similarly, area sown under coarse cereals has increased to 21.32 lakh hectare, from 9.47 lakh hectares a year ago.
Acreage of oilseeds also increased to 18.02 lakh hectares from 10.34 lakh hectares during the same period last year.
Sowing of sugarcane also marginally increased to 0.81 lakh hectares, from last year's level of 0.45 lakh hectare.
India is expected to harvest bumper crop this year based on estimates of higher food grains production in Kharif (summer sown) and hopes of better Rabi (winter) crop with enough water in reservoirs, Finance Minister P Chidambaram said today.
He also said that the agriculture credit has grown by 12.1 per cent during April-August period of this fiscal.
"On agriculture, we estimate this would be a very good year. The first advance estimates of Kharif foodgrains production shows that output will be 10.3 per cent higher than the first advance estimates of the last year," Chidambaram told reporters here.
"Most of the reservoirs are either full or nearly full. This augurs well for Rabi crop as well. So we believe that if the estimates of Kharif productions hold and then with enough water Rabi crop also turns out to be good, this year there would be bumper harvesting," he added.
Foodgrains production is estimated at 129.32 million tonne in the Kharif season of 2013-14 compared with 117.18 million tonne as per the first projection of Kharif season last year on account of good monsoon.
However, foodgrains output stood at 128.20 million tonne in Kharif last year as per the final estimates. The crop year runs from July to June.
"In agricultural sector, there has been credit growth of 12.1 per cent in April-August period as compared to the same period a year ago," Chidambaram said.
The government has set farm loan disbursal target of Rs 7 lakh crore for the current fiscal.
Stating that inflation is fuelled by food, Chidambaram said: "One of the crucial decisions we took was the Ministry of Food would offload the stocks of wheat under the dynamic model where they will identify places where prices have spiked and then offload wheat in those markets in order to cool the market."
The government allowed the food ministry to dynamically price at which wheat would be offloaded in the domestic market. "I think that is beginning to show results," he said.
The Centre has sold 4,34,174 tonne wheat since the CCEA took the decision for dynamic pricing in July to check prices.
"All together, they have sold 5.67 lakh tonnes. This includes direct sales to small traders. More wheat will be sold. There is empowered group of secretaries which is mandated to undertake this task. I think that offloading wheat will cool down markets," Chidambaram observed.
Wheat dropped to the lowest price in more than four weeks on expectations that India will boost exports to a record, reducing demand for US supplies.
Corn futures rose 0.4% to $4.32 a bushel, trimming a second month of declines and near a three-year low of $4.2825. Soybean futures declined 0.1% to $12.7525 a bushel, set for a second monthly loss
The Food Ministry has moved a Cabinet note proposing a reduction in the floor price of wheat by USD 40 at USD 260 a tonne to make exports viable and clear surplus stocks.
The revision in reserve price has been proposed as global buyers quoted USD 260-267 a tonne for recent bids, as against the benchmark price of USD 300 a tonne set for export of two million tonnes of the grain from the state-run Food Corporation of India (FCI).
"Since the bids received were lower than USD 300 a tonne, the Committee of Secretaries has recommended a reduction in the floor price for wheat export to USD 260 a tonne," Food Minister K V Thomas told PTI.
The Food Ministry has moved a proposal for Cabinet's consideration, he added.
In August, the Cabinet Committee on Economic Affairs (CCEA) had approved 2 million tonne wheat exports from FCI godowns for this fiscal subject to a floor price of USD 300 per tonne through STC, MMTC and PEC.
So far, wheat has not been exported from FCI, which is under pressure to clear space for new crop. As on October 1, the FCI had a wheat stock of 36 million tonnes against the requirement of 21.2 million tonnes.
In 2012-13 fiscal, the government had earned USD 1.4 billion from export of 4.2 million tonne wheat by PSUs. Indian wheat had fetched an average price of USD 311.38 per tonne.
Bangladesh's state grains buyer received a low offer of $314.60 a tonne from an Indian firm in a tender to import 50,000 tonnes of wheat, equal to the highest price it has paid in tenders since the start of July.
In the last tender, the state grains buyer got a low offer of $311 a tonne from Singapore-based Export Trading Commodities.
The tenders are part of a plan by the Directorate General of Food to import 850,000 tonnes of wheat in the current financial year, up from around 350,000 tonnes a year ago.
India's Amira Foods made the lower offer among four bidders in the seventh tender by the Directorate General of Food so far this fiscal year, which began in July.
The prices included cost, freight, insurance and other port-related expenses, a senior official of the state grains purchasing agency said on Monday
The Haryana government has fixed a target to achieve production of 127.48 lakh tonnes (LT) of wheat during the ongoing rabi season 2013-14 (October-March) as against the production of 113.42 LT last year.
During Rabi season 2013-14 target has been set to produce 123.81 LT of wheat over an area of 25 lakh hectares, 1.61 LT of grams, 1.95 LT of barley and 11,000 tonnes of rabi pulses over 1.40 lakh hectares, 50,000 hectares and 10,000 hectares, respectively, a Haryana Agriculture Department spokesman said here today.
Similarly, targets have been set to produce 10.80 LT of rabi oilseeds and 24,000 tonnes of sunflower, he said.
He said a campaign would be launched to educate the state's farmers for timely sowing of wheat and efforts would be made to complete 80 per cent of its sowing by November 30.
The spokesman said that the state government is making concerted efforts for timely supply of certified seeds to the farmers. As against the requirement of 13.63 lakh quintals of seeds during Rabi season, arrangements have been made for the distribution of about 14 lakh quintals of certified seeds of different crops.
Apprising about crop wise requirement and the availability of quality certified seeds, he said the certified seeds are being provided by various state agencies and private companies.
For the requirement of 13,10,000 quintals of wheat seeds, there is availability of 13,30,259 quintals, for requirement of 24,380 quintals of barley seeds, there is availability of 34,693 quintals and as against requirement of 8,000 quintals of grams, 11,376 quintals of seeds are available.
He said the availability of fertiliser during the season would be ensured as per the requirement and the state government is in constant touch with the Centre in this regard.
The central government has assured to make available fertiliser to the state as per the requirement, he said, adding that HAFED, the state nodal agency, has been advised to procure 4.50 LT of urea and 1.50 LT of DAP during Rabi season 2013-14 for distribution through cooperative channels present at the grass root level.
India, the world’s second-biggest producer of wheat, will consider lowering the minimum export price of the grain to reduce stockpiles, according to two government officials directly involved in the talks.
The food ministry will propose to the Cabinet tomorrow that it reduce the base price to $260 a metric ton from $300, the officials said, asking not to be identified because they aren’t authorized to speak to the media.
The minimum wheat price needs to be lowered to reduce the 2 million tons of wheat in state reserves, they said. China is the largest wheat producer.
Two state-run traders will soon issue tenders for exporting a total 280,000 tonnes of wheat by Dec. 28, trade sources said on Thursday, as India looks to trim it bulging stocks to make space for another year of expected bumper harvest of the grain.
State Trading Corporation of India will issue a global tender to export 120,000 tonnes of wheat from the west coast, while PEC will float two tenders offering a total 160,000 tonnes from both the east and the west coasts.
Another state-run trader, MMTC Ltd is also expected to soon issue a wheat export tender, the sources said, but did not elaborate.
The tenders will be litmus tests for the government's $300 per tonne floor price, which sources have said will be cut by $40 per tonne to encourage exports and to cut down massive stocks, much of which are stored in the open.
Earlier this month, three state-run traders scrapped their respective tenders for government wheat after they received bids lower than the floor price.
The deadline for submission of bids for both the tenders is Nov. 15, the sources said.
In August, India allowed the state-run grain procurement agency Food Corporation of India (FCI) to export an extra 2 million tonnes of wheat with the floor price of $300 per tonne.
India looks set for bumper harvests of winter crops such as wheat, chickpeas and rapeseed in the wake of a strong monsoon that has left the soil moist and topped up reservoirs.
The crops will follow bountiful summer harvests of rice and soybeans due to the rains, with New Delhi looking to boost agricultural growth to cool double-digit food inflation and revive a slowing economy as manufacturing struggles.
With next year's wheat output seen matching 2013's strong 92.46 million tonnes, the government - already sitting on piles of rotting grain as its storage overflows - could allow more exports. Greater supply from the world's second-biggest producer of wheat would be a bearish factor for global prices which climbed to their highest since June this week.
A jump in production of chickpeas and rapeseed should cut expensive imports of pulses and vegetable oils as the government battles to narrow a gaping current account deficit.
"Winter crop prospects are definitely bright as a good monsoon and late, extended rains have left plenty of moisture in the soil, setting the stage for farmers to harvest bumper crops of wheat, pulses and oilseeds," said Devinder Sharma, an independent food and trade policy analyst.
Farmers in one of the world's leading producers and consumers of food sow winter crops from October, a month after the June-September monsoon rains ebb, with harvesting starting from March.
They principally plant rice, sugarcane, corn and cotton in the rainy months of June and July, while wheat, chickpeas and rapeseed are the main winter-planted crops.
"A few broad indicators like area, sales of seeds and soil moisture indicate that wheat acreage will be as good as the previous year, implying almost similar production," said Indu Sharma, chief of the state-run Directorate of Wheat Research in Haryana, a major wheat growing state in northern India.
India, second to China in wheat production, in 2013 recorded its sixth straight year in which output exceeded appetite. Local demand hovers around 76 million tonnes a year.
To cut stocks, the government has exported nearly 4.5 million tonnes of wheat since December 2011 - the first time it allowed exports since a ban in 2007 - and has asked state-run traders to ship out another 2 million tonnes.
The government buys more than a third of India's total wheat output to supply subsidised food to the poor. It has recently expanded its food welfare programme to feed 70 percent of its 1.2 billion population.
Purchases by the state-run Food Corporation of India make the government the biggest hoarder of the grain. As a result, open market prices have remained high despite bumper harvests, giving farmers good returns on wheat.
"If we do not see any pest attack, unseasonal rains and higher temperatures in February-March, we see farmers getting good yield on their average (annual) planting of nearly 29 million hectares," Sharma said.
Indian reservoirs are brimming after this year's 6-percent higher than average monsoon rains. That means lower irrigation costs and less use of diesel for pumps, helping the government in its fight to curb fuel use in the world's fourth-biggest energy consumer.
To cash in on good soil moisture, farmers are also likely to plant more area with the main winter-sown oilseed rapeseed, as well as chickpeas. The latter, known locally as chana, is the most popular edible pulse in India, used in everything from curries to samosa.
"I am putting in 10 acres of land under chana as against 8 acres last year because the weather is conducive and yields are expected to be higher," said Keshav Prasad Rathi, a farmer-cum-trader from Akola in western Maharashtra, India's No.2 chickpea growing state.
Farmers and traders said the next chickpea harvest would be near the record levels of 8.8 million tonnes produced in the crop year to June 2013. That is good news for India which has to rely on Canada, Myanmar and Australia for around 2.5-3.5 million tonnes of imports of protein-rich pulses.
If weather conditions do not change abruptly, rapeseed production should exceed the 7.82 million tonnes harvested in the previous year, said a Mumbai-based industry official.
Higher output of rapeseed, which has the highest oil content among India's nine main oilseeds, will help cut imports by the world's biggest vegetable oil importer.
But any major jump in output would also depress oilseed and cooking oil prices, reducing growers' returns on the crop. Unlike wheat, the government does not buy oilseeds from farmers and promises to intervene only when prices fall below a support price fixed by the farm ministry.
The government today raised the minimum support price (MSP) for wheat by Rs 50 to Rs 1,400 per quintal to encourage farmers to cover more area under the crop in the ongoing rabi season.
The increase in wheat MSP by Rs 50 per quintal is the same as recommended by the government advisory body, Commission for Agriculture Costs and Prices (CACP), but lower than what was proposed by the Agriculture Ministry due to concern over inflation.
"Wheat MSP has been increased by Rs 50 per quintal to Rs 1,400 for 2013-14 crop year as against Rs 1,350 last year", Food Minister K V Thomas said.
The Cabinet Committee on Economic Affairs ( CCEA) has also approved the MSP of other rabi crops for 2013-14 crop year (Jule-June) to be marketed in the 2014-15.
The agriculture ministry had proposed an increase of Rs 100 per quintal to Rs 1,450 per quintal in wheat MSP for the 2014-15 marketing year (April-March).
When asked for the reasons for rejecting the Agriculture Ministry proposal, Thomas said: "We are concerned about inflation and we can control prices of foodgrains which we procure"
The increase in wheat MSP is likely to lead to a rise in the government food subsidy bill in the next fiscal and may also put pressure on inflation.
The government procures wheat from farmers at MSP during April-June. Wheat is the main crop grown in the rabi (winter) season.
Wheat MSP is the rate at which government buys the grain from farmers.
Wheat's sowing begins in October and harvesting starts from April onwards.
India has sold 30,000 tonnes of milling wheat to the United Arab Emirates, its first private deal since late August as tightening Black Sea supplies open a brief window for exports from the subcontinent.
Along with lower output in major producers China, Brazil and Argentina, this has opened a window of opportunity for India to sell down its massive stockpiles before Australian new-crop supply enters the market from December.
India's wheat stocks at government warehouses stood at 38 million tonnes as of Sept. 1 against a target of 17.1 million tonnes.
"Global prices have risen as supplies are getting tighter in the Black Sea region while export terminals in the United States are busy with soybeans and corn," said a Singapore-based trader.
"We expect more demand for Indian milling and premium varieties of wheat."
Indian wheat with 12 percent protein was sold by private traders at $285 a tonne, free on board, and with up to 13 percent protein was traded at $315 a tonne. The cargo is scheduled to be shipped in November, two traders with knowledge of the deal said.
International traders are also in talks to sell up to 100,000 tonnes of Indian wheat to millers in Indonesia and Thailand, dealers said.
India, which had been aggressively selling wheat in the past two years, saw exports dwindle earlier this year with increased competition from low-cost suppliers such as Russia and Ukraine.
The Indian government has been unable to sell wheat in tenders in the last two months as it is unwilling to cut prices below $300 a tonne, but rising world prices have revived export hopes.
Benchmark Chicago wheat prices have gained almost 9 percent in four weeks, rising to their highest in three-and-half months earlier this week on support from tightening supplies.
"The government may not need to cut prices now as the global market has risen," said a Mumbai-based trader. "Australian prices have moved higher and buyers are looking at Indian to blend with Australian cargoes."
But some other traders were of the view that the government should cut prices to make the most of this opportunity to reduce its stocks.
"They still might not find many buyers above $300 a tonne," said a trader in New Delhi. "Demand for wheat out of state stockpiles will be very strong if the price is around $265 to $270 a tonne."
India's MMTC Ltd has received the highest bid at $261 per tonne in its wheat export tender offering 60,000 tonnes on the east coast, trade sources said on Friday, below the floor price fixed by the government.
The state-owned trader received only two bids, the sources said. MMTC last month issued the tender for shipment by Nov. 15.
As part of efforts to cut down huge stocks, India's cabinet on Aug. 8 allowed state-run traders MMTC, STC and PEC to export 2 million tonnes of wheat with a floor price of $300 a tonne.
India’s wheat output is set to achieve a new milestone this rabi season due to adequate soil moisture left following the late monsoon rain in the major growing regions.
Union Agriculture Minister Sharad Pawar's forecast, India’s wheat output will surpass the record of 94.9 million set in the crop year 2011-12 (July – June). In the last crop 2012-13, however, wheat output declined a marginal to record 92.5 million tonnes.
While inaugurating a rabi Conference in Pusa, Pawar said, “The government hopes wheat production in this rabi season to achieve another milestone given the right amount of moisture available in the soil and various interventions by the central and state governments for the purpose.”
Wheat productivity in India has increased manifold. From 0.8 tonnes per hectare in 1947, the country has now achieved wheat production at the rate of 3 tonnes per hectare.
With continuous increase in overall foodgrains production, India have become a nation self-sufficient in foodgrain from being a net importer a few years ago. India is now the second largest wheat producer as well as exporter in the world. Agriculture sector is contributing significantly in India’s trade. The share of agriculture in India’s overall export basket is going up continuously; from the level of 10.22% in the year 2008-09 it rose to 13.8% in 2012-13.
This year, the onset of south-west monsoon was in time, and in fact, earlier than previous years. The rains have been normal in most of the meteorological sub-divisions except in some areas of Bihar, Jharkhand and North-East where there have been deficient rainfall in the range of 20 – 30% of the long term average. Around 55% of India’s farmlands depend on the monsoon during the kharif season. Bountiful rains in July and August have raised the hopes for a bumper harvest this year. A dry September would help the rice crop mature well in north India.
As against last year’s kharif foodgrain production of 128.20 million tonnes, this year India is poised to produce 129.32 million tonnes as per the first advance estimate. This will be the second highest production. Record production during last few years has given confidence to the policy makers to roll out the ambitious food security bill.
“This shows that our agricultural products are highly competitive in international market,” he added.
But, there is a need to encourage crop diversification and changed cropping patterns with appropriate supporting prices and marketing mechanisms to address the problems being faced in the areas that witnessed green revolution. Looking at the crop diversification seriously, the government has provided Rs 500 crore for higher productivity for the purpose this year.
The States of Haryana, Punjab and West Uttar Pradesh have already prepared plan of action aimed at diverting at least 5% paddy cropped areas to other alternative crops. State procurement machinery is being strengthened and the areas presently facing problems on this front are getting the attention of the central and state governments. States are being impressed upon to bring in marketing reforms in line with the Model APMC Act to enable the farmers to sell their products hassle free and without the interventions of the mandis.
Natural resources i.e. land and water are under considerable strain as India accounts for only 2.4% of world’s geographical area and 4% of its water resources, but support about 17% of world’s human population and 15% of the livestock. The ecological diversity due to varied soil characteristics and climatic factors that witness rainfall even less than 50 mm in some districts of Rajasthan and as high as 12,000 mm in some parts of Meghalaya. Such extreme conditions make the task very tough.
The increase in agricultural production would have to come mainly from enhancement in farm productivity. Thus, to get over the challenge of producing more food grains to meet fast increasing requirements, India would have to enhance productivity by scientific management of inputs, more use of quality seeds, balanced use of fertilizers and economic/efficient use of water resources.
The government aims to earn $600 million by exporting 2 million tonnes of wheat from government warehouses, said C. Viswanath, chairman of the state-run Food Corporation of India (FCI).
In August, the government allowed the FCI to export 2 million tonnes of wheat as part of its efforts to cut down huge stocks at its warehouses.
Earlier, the government had allowed FCI to export 4.5 million tonnes of wheat of which 4.2 million tonnes have been shipped out, helping the government earn $1.4 billion, Viswanath said on Wednesday.
Favourable monsoons have brightened the possibility of foodgrain export in order to reduce the current account deficit- CAD for India. While prices fluctuate in the international market, export we must
Although some parts of the country did not get adequate rainfall, India experienced a timely arrival of southwest monsoon and, on the whole, got an excess of 8% and this augurs well for the ensuing kharif season. Unfortunately, some areas, such as Uttarkhand experienced unprecedented floods, causing huge loss of life, property and standing crops. It will probably take years for this state to return to normalcy, but this has caused irreparable damage in the minds of people there and the whole country. Other areas, such as Odisha, Bihar and Jharkhand had deficient rainfall, but Uttar Pradesh and West Bengal made up due to excess rainfall.
In 2011, India’s rice output was 92.78 million tonnes, and this year, thanks to this good monsoon, this is estimated to be higher, and guestimates are around 100 million tonnes. Such a bumper output will facilitate the implementation of the Food Security programme without much difficulty, provided transportation and distribution arrangements are made methodically. The government is cautious and wants to ensure that foodgrains are made available in time and distributed throughout the country. However, storage facilities continue to be a problem.
While the new crop arrivals will begin soon, the central foodgrains stocks stood at
58.93 million tonnes (MT), consisting of 38.26 MT of wheat and 20.57 MT of rice, which are estimated to be twice the requirements needed to cover the buffer and strategtic reserves. We must export foodgrains without much delay.
Meanwhile, a few things have been worrying the government, such as the CAD (current account deficit) and rupee depreciation. The corrective steps taken to control gold imports have helped but there is the imperative need to accelerate our exports, both foodgrains and industrial products.
Due to the delays in the decision making process, we could not take advantage of
foodgrains export, starting with wheat, which also faced severe international competition from countries like Russia and Ukraine. Their prices are much lower than our own "floor" price and buyers have been flocking to book from them.
Prices fluctuate in the international market, and export we must. The Cabinet
Committee on Economic Affairs cleared the export of 2 MT of wheat, but it is most unlikely that we will be able to get any better than $230-240 per tonne FOB (freight on board) which is prevailing now. Instead of dilly-dallying, we must make the deal and ship the grains out as soon as possible, considering the fact that Food Corporation of India (FCI) spends about Rs25 crore for handling and storage charges per 1,00,000 tonnes. The conditions in FCI godowns need audit and it will be another story if we were to dwell on the warehousing plans of this organisation.
By this export commitment and actual shipments, we must make way for the old stocks to move out and facilitate the kharif crop to come in. In any case, it is not easy to assess the loss arising out of rotting foodgrains, rodents, pilferage and open storage outside the covered warehouses, due to inadequate space.
From the new crop of about 100 million tonnes of rice, government is expected to procure some 35 million tonnes to meet its Food Security programme. Our agricultural front can play a vital role in helping to reduce the CAD. For instance, in the case of the sugar industry, simply by implementing the 5% mandatory ethanol blending programme, government could save upto $340 million per year in oil imports. Soyameal production, for example, is expected to touch 11.5 MT, out of which export orders for 5,00,000 tonnes have been signed at around $515 per tonne, FOB. Iran and Japan have booked 1,00,000 tonnes each while the rest are for the Middle-East. This will also help in reducing our CAD. In the next few weeks, we would be able to at least get an idea of the export commitments from this sector, thanks to the monsoon.
The Food Corporation of India (FCI) will export two million tonnes of wheat in the coming months, targetting to earn foreign exchange worth about 600 million US dollars. The proposal to export the wheat from the stocks of the central pool of the FCI was approved by the Cabinet Committee on Economic Affairs (CCEA) last month. A sub-committee, headed by FCI chairman and MD C Viswanath will soon meet to finalise the formalities for floating international tenders.
The wheat export of 4.2 million tonnes undertaken by the FCI last year had fetched 1.4 billion U.S dollars. “The acceptability of Indian wheat in the international market is an encouraging sign as is evident from the sale last year. Therefore, another 2 million tonnes of wheat will be offered to the foreign buyers,” said a senior officer of FCI adding that it’s the right time to enter the international market.After the tenders are floated, an Empowered Committee headed by the Commerce Secretary will approve the successful bidders.
The buyers of Indian wheat in the international market are mainly from South Korea, Bangladesh and Ethiopia. In the exports of 4.2 million tonnes completed last month, the Indian wheat had fetched an average price of 311.38 dollars a tonne. As per the CCEA decision, the exports of 2 million tonnes of wheat this year will have to be completed by March 31. The FCI will undertake the exports through the State Trading Corporation, PEC and Metals and Minerals Trading Corporation of India, which will float the tenders.
Indian wheat particularly produced in Madhya Pradesh is high on demand in the international market, food ministry officials said. Beating the earlier trend when more and more Indian wheat was believed to be imported for animal feed in many countries now because of the good quality produce in MP, Punjab and Haryana are being used for human consumption.
Senior food ministry sources said that so far about 42.5 lakh tonnes in 2012-13 while the target set was 45 lakh tonnes. The main importers of grains are Korea, South Africa, Middle East, Bangladesh and a few European countries. Officials added that though June end was the deadline for meeting the export target soon government will export another 50,000 tonnes to mop up a tally of 43 lakh tonnes.
"The Indian wheat getting more takers because of better quality is also evident from the price at which we are exporting. When we invited tenders for the first time in 2012 keeping reserve price at $228 per tonne considering the global bad economic condition the minimum price quoted by importers was $296 per tonne," said a ministry official.
He added that when the second batch of tenders was out last December government had increased the reserve price to $300 per tonne. Though there were a few who quoted less most of the bidders offered better price. The weightage average price was approximately $311.38 per tonne. "Some of the bidders even quoted at $350 per tonne. MP wheat is has greater demand for its high protein content and all other indicators are close to the best international standard. Even major Indian companies prefer to buy MP wheat because of the quality. Even wheat from Punjab and Haryana is also of international quality," the official added.
India had banned wheat export in 2007, but in September 2011 the ban was lifted.
During current financial year, government plans to export another 20 lakh tonne wheat at reserved price of $300 per tonne. India is the world's second-largest wheat producer. It would soon resume exports after a gap of three months.
According to industry insiders, the depreciating Rupee may make Indian wheat more competitive in the world market.
State-run entities such as MMTC, STC and PEC will soon start floating tenders to export about two million tonnes of wheat stored by the Food Corporation of India. .
Wheat stored in FCI godowns under the Central pool in Kakinada, Mundra and Kandla ports will be shipped out by March 2014, an official said.
The Cabinet Committee on Economic Affairs had cleared the export of two million tonnes of wheat last month.
Buoyed by the earlier response, the Government is expected to retain the floor price at $300 a tonne to test the market response.
However, the prevailing global prices are lower by 20-30 per cent for wheat of comparable quality originating from Black Sea countries such as Ukraine and Russia.
The Black Sea origin wheat for feed purpose is quoting at $230 a tonne, while the milling variety is fetching $240 a tonne free-on-board, an analyst said.
For 2012-13, 4.24 million tonnes of wheat were exported from the Government stocks and the average realised price was $311.38 a tonne.
Besides helping earn foreign exchange, wheat exports are expected to help FCI create space for storing the upcoming kharif rice stocks.
Exports would also help FCI save storage and handling costs of about Rs 25 crore for one lakh tonnes of wheat.
Wheat exports have slowed down in recent months, as buyers mainly from the Far-East, have switched over to cheaper grain from Black Sea.
Total exports in the current fiscal, including shipments by private players, are estimated at around two million tonnes.
As on September 1, the central foodgrain stocks stood at 58.93 million tonnes, with wheat stocks making up 38.3 million tonnes and rice 20.57 million tonnes.
The stocks are more than twice the requirement for buffer and strategic reserves.
Ever wondered which crop has given maximum return to farmers in the last few years, or cultivation in which state is most profitable for the growers, a recent study perhaps has the answers to these
According to a analysis done by the Commission for Agriculture Costs and Prices (CACP), among all the crops, in absolute terms sugarcane has given the highest average gross return per hectare to farmers between 2008-09 to 2010-11, followed by cotton and thereafter wheat.
The analysis was limited only to crops for which the government determines the Minimum Support Price (MSP) and excludes high-value crops like fruits, vegetables, poultry etc. It has been done by Ashok Vishandass and B Lukka from the CACP.
It showed that for a farmer sugarcane gave an average return of Rs 82,800 for each hectare of land, the highest among all the crops. The worst performer during this period (2008-09 to 2010-11) was sunflower which gave a negative return to the farmers in relation to its cost of production during the same period. Sunflower gave a gross return which was around 40% less than its cost of production.
In absolute terms, the average returns per hectare for a cotton farmers between 2008-09 to 2010-11 works out to be around Rs 29,100 per hectares, while for those cultivating wheat was Rs 24,300 per hectare.
“In the last decade as well, out of the 22 crops analyzed, 8 crops (wheat, barley, tur, lentil, rapeseed and mustard, sesame, cotton and sugarcane) have reaped 100% or more gross profit, another 10 crops (paddy, maize, bajra, gram, urad, moong, soyabeans, ragi and groundnut), could post a profitability of 50 to 100% and only three crops (jowar, ragi and groundnut) could post a profitability of less than 50%,” the Commission.
The worst performer in this period also was sunflower.
The analysis shows that state-wise, Haryana, Kerala, Punjab and Uttarakhand gave the highest profitability to farmers, which was in excess of Rs 30,000 per hectare for all crops between 2008-09 to 2010-11, while Andhra Pradesh, Gujarat, Tamil Nadu and Uttar Pradesh gave farmers a profitability which was more than the national average. The worst was in Jharkhand, Assam and Chhattisgarh as there states had higher cost of production.
“ The analysis takes into account only those crops for which MSP is declared and not the broad agriculture sector and excluded high valued horticulture, fruit and vegetables crops, animal husbandry and fisheries,” the study said.
The study said as there have been allegations of skeweness in price determination and lack of transparency by the CACP while determining the cost of production, the government should immediately constitute an expert group to assign suitable numerical weight to each determinant of MSP like labour, diesel etc in accordance with their relative importance.
The Food Corporation of India (FCI) plans to sell over 9.5 million tonne wheat to bulk consumers in the open market in an effort to bring down domestic prices. It will sell wheat under the open market sale scheme (OMSS) through tendering with a base price of Rs 1,500 a quintal.
Meanwhile, Planning Commission deputy chairman Montek Singh Ahluwalia will meet food minister KV Thomas and senior FCI officials on Tuesday to discuss plans to set up two million tonne of silo storage through public-private partnership spread over 42 locations across 10 states.
Of the total supplies of 29.2 million tonne of wheat this season (2013-14), government agencies and the FCI have procured 25.08 million tonne till July 8.
In the 2012-13 season, the FCI and state procurement agencies procured 38.1 million tonne compared to 28.1 million tonne in 2011-12. In a normal year, wheat procurement for the central pool would be 25-30 millions tonne, say analysts.
As on July 1, total grain in the central pool stood at 77.7 million tonne. Of this, 44.4 million tonne was wheat and 33.3 million tonne was rice. According to strategic buffer stock norms --which is the minimum stock requirement for PDS and welfare norms -- the minimum amount of wheat in the central pool should be at 20.1 million tonne and 11.8 million tonne rice by July 1.
Over 7.5 million tonne of wheat was sold under OMSS in the previous year. "This year, 8.5 million tonne will be released for bulk consumers and 1 million tonne for small private players," said FCI chairman and managing director C Vishwanath.
The tenders will be floated in a week with the initial quantity yet to be assessed, said officials. The government targets to release over 3.5 million tonne from the 2011-12 harvest. "We will be first liquidating the old crop of 2011-12 from Punjab and Haryana godowns," said Vishwanath.
The tenders are coming after a moratorium of three months. "Wheat prices were looking to become firm as the procurement season got over. This move will ensure steady supply in the market and keep a check on prices," he said.
On the National Commodity and Derivatives Exchange (NCDEX), spot price for Delhi delivery was being quoted at Rs 1,561.65 per quintal. The August contract on the NCDEX was firm by 0.32% at Rs 1,586 a quintal with an open interest of 12,830 lots.
Against the target of exporting 4.5 million tonne wheat, central public sector undertakings such as MMTC, State Trading Corporation and PEC are expected to clock a figure of 4.3 millions tonne till date. FCI officials said they were awaiting the government's clearance for an export of 2 million tonne in the coming months. "We have established ourselves in the international market. There is demand for Indian wheat and we are geared to sell quality grain," said Vishwanath.
South Korea has bought 1 million tonnes of wheat from India's state-run traders, state-run Food Corporation of India said in a statement on Thursday.
Ethiopia, Bangladesh and Yemen have emerged as the other top buyers from India, which is exporting wheat from government warehouses to cut down huge stocks piled up thanks to bumper harvests since 2007.
State-backed traders -- PEC Ltd, State Trading Corp Ltd and MMTC Ltd -- have sold a total 4.03 million tonnes so far of the 4.5 million tonnes permitted, the statement said.
Food Minister K. V. Thomas has said the government is expected to allow another 2 million tonnes of wheat for export, bringing the total offered through this mechanism to 6.5 million tonnes.
India had offered another 5 million tonnes of wheat direct to private traders but no deals have been done here because the floor price of $300 per tonne is considered unattractive, given the extra transportation costs.
The Food Corporation of India (FCI) said Indian wheat exports fetched a price of $300.10 per tonne in the international market, according to the last tender opened. The latest lot up for sale crossed the July future price of the Chicago Board of Trade (CBOT) of $260 per tonne. FCI has exported about four million tonne (MT) of wheat so far, securing an average of $311,69 per tonne.
An FCI official said the earnings from this year's exports proved that the wheat exported by the corporation has a wider and higher acceptability in the international market. He added, “We got a very good response to our wheat despite a drop in the global demand.”
After a long gap, the government allowed the export of 4.5 million tonne of wheat this year, because the production increased and there was excess stock of wheat in the country. Between 2002 and 2004, India exported it on a commercial basis, but prices were not so attractive then.
Of the export target, 4.03MT has already been dispatched. The reserve price for export of the first lot of two million tonnes was just $228 per tonne, while for the second lot it was fixed at $300 per tonne.
“There is a huge demand for our wheat now,” the FCI official said. “We get prices as good as that of Australian Soft Wheat, one of the best in the world. The exports have proved the acceptability of our wheat in the international market,” he added.
The main buyers for Indian wheat are South Korea (10,01,789MT); Ethiopia (6,80,358MT), Bangladesh (6,75,432MT), Yemen (3,06,519MT), Thailand (2,71,767MT) and Indonesia (2,10,700MT). Other buyers included the United Arab Emirates, Sudan, Oman, Qatar, Vietnam, Malaysia and the Philippines.
FCI has exported the wheat through agencies like the State Trading Corporation of India Ltd (STC) and PEC Ltd. Mundra in Gujarat was the port that handled the largest quantify of export, followed by Kandla (also located in the Kutch area of the western Indian state).
The main players in the international wheat market are the United States of America, Canada, Ukraine, Australia, Russia and Argentina.
“We have a multi-layer quality check to ensure that the Indian wheat gets a credible brand,” the FCI official explained.
“The samples were first sent to the Directorate of Wheat Research at Karnal, Haryana, for tests for chemical parameters. Besides the tests by the buyer representatives, FCI also made sure of tests to prevent rejection of shipments. We exported the wheat only after the buyers themselves were satisfied about the product,” the official said.
The government has deferred a decision on allowing additional wheat for overseas sales, Food Minister KV Thomas said on Friday, without giving any reason for the decision.
Thomas told Reuters in an interview on Wednesday that the cabinet would be considering the step on Friday.
But the government has approved a proposal to sell 10.5 million tonnes of wheat and rice in the open market to ease prices.
"The government has approved a total of 10.5 million tonnes of grains," Manish Tewari, the information and broadcasting minister, told reporters after a cabinet meeting.
Ruling out any production fall in wheat as estimated by the USDA for 2012-13, a government research outfit DWR today said the country's overall output is expected to be at record 96 million tonnes as yield losses in Punjab and Haryana will be compensated by other states.
In its third advance estimate for 2012-13 crop year (July-June), the government has pegged wheat output at 93.62 million tonnes for 2012-13 crop year (July-June) and crop is being harvested from April onwards.
However, the US Department of Agriculture (USDA) had recently said that India's wheat output is projected to decline to 87 million tonnes in 2012-13 due to yield lossses in Punjab and Haryana due to untimely rains.
Asked about the USDA's forecast, Karnal-based Directorate of Wheat Research (DWR) Project Director Indu Sharma said: "The latest field trial experiments shows that the overall production of wheat could be slightly higher than last year at around 96 million tonnes."
India's wheat production stood at 94.88 million tonnes in 2011-12 crop year.
"Earlier, we anticipated some loss in Punjab and Haryana. But the field trial experiments shows that yield loss in these two states are not significant," she said.
Also, the yield losses in these two states will be compensated by Madhya Pradesh, Rajasthan, parts of Uttar Pradesh and Himachal Pradesh, she added.
The change in production figures will be reflected in the government's final crop estimate that is due for release by the Agriculture Ministry.
Sharma was here for the launch of a software called 'nutrient expert decision support tools for maize and wheat'.
The software, developed jointly by International Plant Nutrition Institute (IPNI) and the International Maize and Wheat Improvement Center (CIMMYT), will suggest farmers on use of fertilisers especially to wheat and maize crops.
The State Trading Corp (STC) has received the highest bid at $300 per tonne -- a current floor price -- in its wheat export tender offering 100,000 tonnes on the west coast, trade sources said on Thursday.
STC issued the tender last month offering the grain from government warehouses for shipment by mid-July.
Government-backed traders MMTC, STC and PEC have been floating export tenders to ship out wheat from overflowing government warehouses since mid-2012.
The government has sold almost all the 4.5 million tonnes made available through this channel and could allow another 2 million tonnes under the same mechanism as early as Friday.
Food Minister KV Thomas said on Wednesday the extra exports would have the same $300 per tonne floor price.
On Wednesday, PEC received the highest bid at $300 per tonne from Dubai-based trading firm Al Ghurair in a tender offering 90,000 tonnes of wheat from the west coast.
In the last tender on May 22, STC received the highest bid at $304.5 per tonne.
The Country will consider allowing another 2 million tonnes of wheat exports at a cabinet meeting on Friday, Food Minister K V Thomas told Reuters on Wednesday.
"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.
The sales would be via state-run trading companies. Another 5 million tonnes has been offered direct to private traders but no deals have been done here because the floor price is considered unattractive given transportation costs.
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.
FAO is calling for countries in the global ‘wheat belt’ to step up monitoring and prevention for wheat rusts – fungal diseases that do especially well in particularly wet seasons. Yields could be affected across North Africa, the Middle-East into West and South Asia, which account for more than 30 per cent of global wheat output and nearly 40 per cent of total land area dedicated to wheat planting.
“The favourable growing conditions for wheat are also good for the rust diseases that affect wheat, so when there is good precipitation for wheat, that is also when wheat rusts will be able to best thrive and proliferate,” says Fazil Dusunceli, agriculture officer in FAO’s plant production and protection division, a specialist in wheat rusts.
"The ideal approach to prevent the rusts is to grow the right cultivars which are resistant to rust diseases. This minimises the disease risks. In case of sudden epidemics, fungicide sprays can help to mitigate the effects of the disease, but only if they are caught at an early stage,” Dusunceli adds.
Wheat rusts manifest themselves as yellow, blackish or brown coloured blisters that form on wheat leaves and stems, full of millions of spores. These spores, similar in appearance to rust, infect the plant tissues, hindering photosynthesis and decreasing the crop’s ability to produce grain.
Imminent risk still in East Africa, highland areas
Dusunceli underlines that monitoring and surveillance should be stepped up for rusts especially in East Africa in Ethiopia and Kenya, where the growing season is underway and rains have been favourable. If wheat rusts strike on susceptible varieties at an early stage, he said, almost the entire crop can be lost.
“Although in lowlands in warmer areas the crop has fully matured or has been harvested, in highland areas and more mountainous regions, including Central and West Asia, there is still a risk of outbreaks, but there is still time to reduce the losses from yellow rust especially,” Dusunceli notes, since the crops at higher altitudes and lower temperatures are still maturing.
According to a joint alert on www.rusttracker.org issued by the International Maize and Wheat Improvement Center (CIMMYT) and the International Center for Agricultural Research in the Dry Areas (ICARDA), both FAO partners, “Conducive climatic conditions for rusts, especially yellow rust, are resulting in potentially serious outbreaks in the CWANA [Central and West Asia and North Africa] region. Cool and wet conditions have persisted in many countries from Morocco to Bhutan.”
According to the report, especially yellow (stripe) rust has been damaging on susceptible varieties in some parts of Afghanistan, Azerbaijan, India, Iran, Iraq, Morocco, Pakistan, Turkey and Uzbekistan. A widespread epidemic similar to one in 2010 has nevertheless not occurred, thanks partly to the progressive introduction of resistant cultivars, chemical control and warming weather conditions.
However, in some locations disease severities increased to high levels requiring fungicide applications.
In Pakistan, there was a marked increase in reports of high (above 40 per cent) and moderate (above 20 per cent) severity for all three types of rust diseases, but the effects of yellow rust were most pronounced, appearing in 53 per cent of the surveyed fields.
In Afghanistan, yellow rust appeared in the East, North and Northeast zones at the end of March. Incidence and severity increased on susceptible crops until the last week of April, but warmer weather is expected to curtail further disease spread.
In Morocco, stripe rust was widespread in almost in all areas: 40 per cent of fields surveyed registered a 50 per cent or more severity, requiring fungicide applications.
Prevention, early warning and rapid response key
Using resistant cultivars and early intervention are the key principles of controlling wheat rust diseases, but monitoring for rusts on the ground is typically weak and likewise the reporting times are slow in many countries.
In an effort to cut reporting times, Dusunceli says, FAO recently launched a pilot mobile phone surveillance system in Turkey, using smart phone and SMS reporting technology. A key point is the fact that the task of reporting has been assigned to agricultural extension officers, who in their daily work would normally be visiting wheat fields in each district on a regular basis.
“The information is now instantaneous,” says Dusunceli, “and it is now funneled directly into a database housed in the agriculture ministry. That data will give institutions the knowledge and early warning signs needed to react quickly.”
Wheat Rust Disease Global Programme and partnerships
FAO has been running a global programme since 2008 to provide policy and technical support to the concerned countries in collaboration with CIMMYT, ICARDA, IFAD and Cornell University in the context of the Borlaug Global Rust Initiative. Emphasis is placed on prevention, by encouraging the development and planting of resistant cultivars, use of certified seed, rapid seed multiplication, training of farmers, strengthening surveillance and emergency response capacities and international cooperation.
Wheat rusts, like other pathogens, over time can evolve into new strains that are more virulent and damaging to wheat crops. Ug99 is one such strain of stem rust, which emerged in Uganda in 1998-1999. It has since spread beyond East Africa as far as Iran and the worry is that most of the wheat varieties across nearly the same swath of East Africa, West and South Asia are susceptible to this virulent strain. Similarly the Yr 27 virulent strain of yellow rust caused significant losses across the same region from North Africa into West and South Asia during the serious epidemics in 2009 and 2010.
Wheat rusts must be closely monitored as part of a global collective effort. To achieve sustained and improved productivity in wheat, increased investments are needed to support regional and international collaboration efforts to support integrated disease management in the regions often at risk of wheat rust epidemics, specifically in East and North Africa, the Near East and Central and South Asia.
India's state-run State Trading Corp issued a tender to export 100,000 tonnes of wheat for shipment by mid-July, a company statement on Thursday said.
The tender has offered the quantity from government warehouses located at Mundra port on the west coast.
Bids for the global tender close on June 20.
STC is offering wheat from government stocks as part of New Delhi's efforts to cut overflowing grain silos due to one more year of bumper harvest.
Indian state-run trading company PEC has issued an international tender to export 90,000 tonnes of Indian milling wheat for shipments between June 20 to July 25, a statement on the company's website showed on Wednesday.
The company would make available quantity at Kandla port on the western coast, it said. The last data to bid is June 19.
Wheat procurement in the rabi marketing season 2013-14 is likely to touch 28-30 million tonne. When procurement began in April, the government had estimated to buy 44.06 million tonne wheat this year. "Wheat procurement this season will fall to 28-30 million tonne," said Union Food Minister KV Thomas. He added that since the government was strict with the OMSS price and didn't accept the industry demand of cutting wheat price, private trade have begun procuring in this season.
"It will not make any impact on our schemes as we have an ample stock," he said. On lowering the minimum export price of wheat from $300 a tonne, Thomas said the Group of Ministers will take a decision on the issue in the next meeting. "We are not in a hurry to export. Private trade should not survive on our subsidy," he said.
Food Corporation of India officials said the fall in procurement was not alarming. "Average procurement remains at 25 million tonne and the year 2012 was an exception with production increasing by 7 million tonne to 93 million tonne," said an FCI official adding that the minimum support price had substantially risen by Rs 115 to Rs 1,285 a quintal in 2012 compared to 2011. This year, the MSP is Rs 1,350 a quintal.
Wheat arrivals across the country touched 28.44 mt and procurement by government agencies at 24.96 mt on Tuesday.
India's state-run trading company MMTC Ltd has issued a tender to export 50,000 tonnes of wheat for June shipment, a company statement said on Monday.
Bids closes on June 3. The state-backed trader will export from government warehouses on the east coast and through the Kakinada port.
State-run companies MMTC, STC and PEC started floating export tenders in July 2013 to ship out wheat from overflowing government warehouses.
As much as 58.80 lakh tonnes of wheat has arrived so far in Haryana during the current procurement season.
Out of it, over 58.71 lakh tonnes of wheat has been procured by Government agencies at the minimum support price and 9,232 tonnes has been purchased by private millers and traders, a spokesman of the Food and Supplies Department said here today.
He said HAFED has procured over 22.77 lakh tonnes of wheat while Food and Supplies Department had procured over 14.61 metric tonnes.
Other agencies that procured wheat were Food Corporation of India (over 7.25 lakh tonnes), Haryana Agro Industries Corporation (over 5.70 lakh tonnes), Haryana Warehousing Corporation (over 5.29 lakh tonnes) and CONFED (3.06 lakh tonnes of wheat).
State trading firm PEC Ltd has received the highest bid of $305.10 a tonne from the Dubai-based Al Ghurair for export of 40,000 tonnes wheat from Government stocks through the Kandla Port.
For PEC’s other two tenders for shipments from Gangavaram and Krishnapattanam, it has received offer from Singapore-based Concordia at $303.10 and $301 for 30,000 tonnes and 40,000 tonnes, respectively.
Among the bids opened by the three State trading entities – MMTC, STC and PEC — in the past three days, PEC got a better response compared with the other two.
On Wednesday, STC received the highest bid of $304.5 from Sudan’s Promising International Trading Co, while on Tuesday MMTC was forced to cancel its tender for one lakh tonnes as the offer price it received from Gencore was much lesser than the floor price of $300 fixed by the Government.
Interestingly, Glencore quoted a higher price of $303.37 for PEC’s Kandla tender on Thursday, while for STC’s tender on Wednesday, the Anglo-Swiss firm was the second highest bidder at $301.87 for 50,000 tonnes. Other bidders for PEC’s Kandla contract include Emmsons International at $303.89 and Condordia at $294.25.
The State trading entities have been floating export tenders to ship out wheat from Government stocks since July 2012.
In the last financial year, these entities were expected to have shipped out around three million tonnes from Government stocks, while the shipments by private traders stood around 2.6 mt for the period.
In the current financial year starting April 1, exports from Government stocks stood at around five lakh tonnes, while shipments by private traders are estimated at 3-4 lakh tonnes, sources said.
The government could garner over Rs 25,000 crore by just exporting 17 million tonnes of wheat that are lying in open storage facilities of FCI, an Assocham study said.
The industry chamber also suggested the government to keep an ambitious agri-export target of USD 50 billion for this fiscal as this will help control current account deficit.
"The Food Corporation of India (FCI) can earn over Rs 25,000 crore through exports of about 17 million tonnes (mt) wheat lying in its open warehouses across various states," Assocham said in a statement.
The study "Agri-exports: High potential and action agenda" has strongly advocated a long-term agricultural exports promotion policy as farm exports have the potential to be the second most significant foreign exchange earner after software and services exports.
Targeted export levels are imperative for raising the economic growth and narrow down the rising current account deficit, it added.
"The government should set a USD 50 billion target for agricultural exports for the 2013-14 fiscal which should subsequently be raised to about USD 70 billion in 2017 which will help in reducing the rising CAD," Assocham President Rajkumar Dhoot said.
Higher farm exports would promote crop diversity, drive productivity of crops and encourage farmers grow specific crops to meet global demand, he said.
As per official data, the country had exported USD 33.54 billion worth agriculture and allied products in 2012-13.
As there is huge scope for raise farm output in eastern states, there is need for greater investment for implementing modern and new farm practices.
The Government agencies and private millers procured more than 1,09,86,697 tonnes of wheat till last evening.
Out of total procurement of 1,09,86,697 tonnes of wheat in all the procurement centers of Punjab, the Government agencies procured 10782914 tonnes of wheat till date whereas private traders procured 1,27,296 tonnes of wheat. Till May 15, PUNGRAIN had procured 19,81,046 tonnes (18.0 %) whereas MARKFED 23,87,471 tonnes (21.7 %). PUNSUP 21,96,096 tonnes (20.0 %), PSWC 12,62,075 tonnes (11.5 %) whereas PAIC had procured 10,33,340 tonnes (9.4 %) of wheat.
The Central Government agency FCI had been able to procure 1922886 tonnes (17.5 %) of wheat.
The spokesman added that District Sangrur with 9,44,835 tonnes of wheat procurement was leading in procurement operations whereas District Sangrur with 8,63,860 tonnes of procurement was at second slot. While Patiala with 8,08,381 tonnes of wheat procurement ranked at third position.
The State Government has set up more than 1,750 procurement centers and mobilized its total machinery to ensure smooth procurement of wheat, the spokesman added.
World wheat trade for the July-June international trade year in 2013/14 is projected at 143.0 million tons, just 0.7 million tons lower than in the previous year. However, the structure of imports and exports by country is expected to shift substantially.
The largest decline in wheat imports in 2013/14 is projected for Iran, down 4.0 million tons to 1.0 million, given expectations of near-record production and large politically motivated imports in 2012/13 that tripled Iranian wheat stocks. Increased 2013/14 wheat output is expected to limit imports in Morocco, Turkey, Iraq, and Algeria. A partial switch to competitively priced corn is expected to reduce wheat feed imports for Japan and South Korea.
Increased wheat imports in other countries partly offset these declines. The EU-27 is expected to boost its wheat imports by 0.8 million tons to 6.5 million, as feed-quality wheat from Ukraine and Russia that was not readily available in 2012/13 is expected to find its way into Europe (mainly Spain).
Egypt is expected to at least partially resolve its financial conundrum problems and import 9.0 million tons of wheat, 1.0 million tons more than in 2012/13. However, this amount is not expected to be sufficient to start rebuilding their wheat stocks. Saudi Arabia is another country that is expected to import 1.0 million tons of wheat more than last year, with half of this increase expected to be used for animal feed, as the Saudi government is reportedly attempting to reduce the county’s reliance on barley feeding.
A number of countries are expected to increase imports of wheat for food use to maintain the existing per capita consumption with a growing population. Imports are up 0.4 million tons, or 6 percent, in Indonesia as new millers started to operate in the country requiring additional supplies of milling-quality wheat.
Significant shifts in market shares are expected among wheat-exporting countries in 2013/14. Competition among them is expected to be intense throughout the year because of high wheat supplies in key exporting countries. Three major Black Sea exporters–Russia, Ukraine, and Kazakhstan–are expected to be the most pricecompetitive grain exporters in the world market for feed and lower-grade foodquality wheat.
Exports by Russia, Ukraine, and Kazakhstan combined are projected to increase almost by half (up 45 percent) to 35.0 million tons. All three countries’ stocks are currently at exceptionally low levels, which might weigh on their exports at the start of the marketing year. The main reason for the increase for all 3 countries is the recovery of wheat production after last year’s extremely adverse weather. Increased competition from the Black Sea suppliers in North Africa and Middle East is expected to result in a decline of 4.5 million tons in EU-27 wheat exports to 17.0 million.
Despite increased supplies of wheat, Canadian wheat exports are expected to remain steady at a healthy level of 18.5 million tons, as competition is expected to reduce the premium for its high-quality wheat. Though Argentine exports for the international 2013/14 trade (July-June) year are down 1.0 million tons to 6.5 million, its local marketing year exports (December-November) are up 2.0 million tons, reflecting higher wheat output.
This happens because the first 5 months (JulyNovember) of the 2013/14 international trade year are also the last 5 months of the Argentine 2012/13 local marketing year, and wheat exports during these months in 2013 are expected to be lower than the near-record wheat exports during the same months of 2012, reducing July-June 2013/14 exports.
Reduced supplies (lower beginning stocks that are only partly offset by higher wheat output) and strong competition from the Black Sea in North Africa and Middle East are expected to reduce Australian exports for the international trade year by 2.0 million tons to 17.0 million (down 1.0 million to 18.0 for the local October-September marketing year). With its still bulging but somewhat reduced wheat stocks, India is expected to continue its export program, exporting 8.0 million tons of wheat, down 0.5 million on the year.
Chasing to beat a record wheat procurement of about 85MT last year, MP government so far, has procured about 58.75 lakh MT wheat, according to a press release here on Tuesday.
Of this, 56.48 lakh MT has been transported and safely stored, which is 96.3% of total procured wheat. A record 85 lakh MT wheat was procured on support price in 2011-12.
According to the press release, wheat has been procured at procurement centres in districts from some 8.60 lakh registered farmers against which payment of Rs 8,813 crore has been made to them.
It is noteworthy that the number of registered farmers in the state is 14.33 lakh. Farmers are being provided bonus worth Rs 150 per quintal over and above support price of Rs 1350 per quintal.
The procurement process will continue till May 18 in Bhopal, Narmadapuram, Ujjain and Indore divisions and till May 25 in Sagar, Jabalpur, Gwalior, Chambal, Shahdol and Rewa divisions.
Wheat stocks for May at government warehouses surged more than 76 percent to 42.7 million tonnes from April, government sources said on Wednesday, increasing pressure on the world's No. 2 producer to boost exports and cut down huge stockpiles.
But India's latest attempt to boost wheat exports and cut its bulging stocks by offering private traders the chance to buy up to 5 million tonnes direct from warehouses is likely to be spurned by most traders as they baulk at the costs of transportation and financing.
New Delhi has also offered 4.5 million tonnes of wheat via tenders by state traders, of which about 3.6 million tonnes have been contracted for exports.
New Delhi uses the stocks to distribute cheap grain to its half a billion poor people and also holds some in inventory as a buffer for emergencies. The government is trying to expand the subsidised food progamme but its bill has yet to be approved.
India's rice inventory on May 1 was 34.7 million tonnes against 35.5 million tonnes in the previous month, the sources added.
India harvests only one wheat crop a year, with harvests from March bumping up stocks. The new season rice harvest begins in October, which are then drawn on for distribution in government welfare schemes.
The government day said it has invited financial bids from private traders for export of nearly one million tonnes of wheat stored in the FCI godowns in Punjab and Haryana.
Last month, the Centre had allowed export of an extra 5 million tonnes (MT) wheat of 2011—12 crop from its godowns via private trade to ease storage burden.
“Food Corporation of India (FCI) has invited the financial bids for sale of wheat of crop year 2011—12,” an official release said.
The base price of the wheat to be exported Under Open General Licence (OGL) from the Punjab and Haryana will be Rs 1,484 per quintal, it said.
The financial bids have been invited for 5,40,000 tonnes of wheat in Punjab and 4,09,826 tonnes in Haryana.
Meanwhile in a reply to the Rajya Sabha today, Food Minister K V Thomas said that FCI had invited technical bids for empanelment of private exporters.
FCI has received four technical bids for Punjab and 10 technical bids for Haryana, he said.
“The government has recently allowed sale of up to five million tonnes of wheat till June 30, 2013 from the central pool stock in Punjab and Haryana pertaining to the stock of 2011-12 through private traders for export purposes,” he said.
This channel has been opened to speed up evacuation of surplus old stock of wheat in central pool, he added.
Mr. Thomas also said there is no proposal to export rice from the central pool.
The Minister also informed that nearly 3 MT of wheat has been exported from the first two tranches of 4.5 MT allowed last year through PSUs.
“No import of wheat and rice has taken place on government account during the last two years,” he said.
As on April 1, the government had wheat stock of 24.20 MT, as against the requirement of 7 MT. In case of rice, the stock was 35.46 MT, as compared to the buffer norm of 14.2 MT.
Wheat stocks have risen in the FCI godowns due to record procurement followed by bumper crops in the last two consecutive years. Wheat output is expected to be 92.30 MT in the 2012—13 crop year (July—June).
India, the world’s second-biggest wheat grower, will consider cutting the export price to boost shipments from state reserves amid forecasts for a record harvest for a sixth year.
A panel of ministers headed by Agriculture Minister Sharad Pawar will review the minimum price of 14,840 rupees ($274) a metric ton that private traders need to bid for supplies from the Food Corp. of India, Food Minister K.V. Thomas told reporters in New Delhi today. The government is seeking to export 5 million tons by June 30 and the ministers may consider extending the deadline after the Food Corp. failed to get any bids to ship the grain, he said.
Exports from India have slowed after a rally in domestic prices, hampering efforts to make room in warehouses for an all- time high harvest. A decline in global prices to a nine-month low earlier this month on signs of a rebound in output from the U.S. to Australia has also cut demand for Indian grain in Southeast Asia and Africa, according to Pravin Dongre, chairman of the India Pulses & Grains Association.
“Unless India decides to export wheat at international prices, the export campaign will slowly wind down to a very negligible quantity,” said Dongre. “It’s better to export if there is not enough place to store as it’s a national loss when kept in open. It’s better to reduce your losses now than incur expenses on storage.”
Overseas sales may tumble to between 500,000 tons and 1 million tons in the year that began on April 1 from 5.3 million tons in 2012-2013 should exporters not cut prices, Dongre said. Indian wheat is $30 a ton more expensive than supplies from the Black Sea region, he said.
Wheat for July delivery climbed 0.3 percent to $7.185 a bushel at 11:53 a.m. in Mumbai today, extending a 3.5 percent advance yesterday. Futures tumbled to $6.5975 on April 1, the lowest for a most-active contract since June 20 on forecast of supplies outpacing demand.
State stockpiles in India climbed 21 percent to 24.2 million tons at the start of this month from a year earlier and more than thrice the quantity needed as buffer and emergency reserves, according to official data. The government may miss a target to buy a record 44 million tons from growers in the marketing year that began April 1 as private traders have stepped up purchases, Thomas said. State agencies may now buy about 40 million tons, he said.
Wheat has rallied 7.3 percent in Mumbai this month as exporters competed with government agencies for supplies in the market. The government increased the minimum price for the grain by 5 percent to 13,500 rupees a ton.
Production in the year ending June may exceed the 94.9 million tons harvested a year earlier, Indu Sharma, director at the state-run Directorate of Wheat Research, said April 8. The agriculture ministry predicts the crop to drop to 92.3 million tons.
he government may have to trim its 2013-14 wheat procurement target by four million tonnes (mt) to around 40 mt because of heightened purchases by private traders from Madhya Pradesh and Uttar Pradesh. However, this will not have any impact on the public distribution system (PDS) as wheat stocks in state-run warehouses are more than three times the required quantity.
In the 2013-14 crop marketing season that started from April 1, the government had targeted to purchase around 44 mt of wheat from farmers, almost six mt more than the actual procurement of last year. The target was raised because of bumper harvest in Madhya Pradesh, Uttar Pradesh, Punjab and Haryana.
“In Madhya Pradesh and Uttar Pradesh, private traders have been active this year in purchasing wheat directly from farmers and are not waiting for the government to make the first move which could lead to lower-than-expected procurement for the central pool,” food minister K V Thomas told Business Standard.
He added the government might also think of exporting more wheat from the central pool over the already sanctioned around 10 mt as and when the need arises. “First, we will have to exhaust the total allocated quantity for exports and then think of increasing it,” Thomas said.
The government first allowed export of 4.5 mt of wheat from the central pool and then okayed another five mt to clear its inventories ahead of the new procurement season. “We might think of giving private traders more time to export wheat from the second lot,” the minister said.
Meanwhile, latest government data showed that in Uttar Pradesh, state-run agencies have procured around 210,195 tonnes of wheat till last week against 502,337 tonnes procured during the corresponding period last year. In Madhya Pradesh, state agencies procured around 4.65 mt of wheat till last week, against 3.85 mt during the year-ago period.
Thomas said private traders were not very active in the northern states of Punjab and Haryana because of high taxes imposed by the state governments. Punjab imposes a tax of around 14.5 per cent on wheat, while Haryana has a tax of around 11.5 per cent. In contrast, the total tax on purchase of wheat from Uttar Pradesh is nine per cent, while in Madhya Pradesh it is 4.7 per cent.
Officials said in the 2013-14 marketing year, across the country, the government has till date purchased around 19.44 mt of wheat from farmers against 18.99 mt purchased during the corresponding period last year. Of this, highest procurement has been in Punjab, where till Sunday, around 8.89 mt of wheat has been procured by central agencies, up from 7.56 mt procured during the same period last year, while Haryana purchased 5.13 mt of wheat till Sunday against 6.47 mt during the year-ago period.
The Food Corporation of India has found no takers for its initial tender to sell about one million tonnes of wheat to private players for exports as the price is high.
The Government had fixed a floor price of Rs 1,484 a quintal for offloading about five million tonnes of wheat from the 2011-12 crop from FCI warehouses in Punjab and Haryana, for which the first set of tenders were floated.
“There was no response to our tenders today. We plan to re-tender the same later this week,” FCI Chairman, Amar Singh, told Business Line.
The FCI had tendered 4.09 lakh tonnes (lt) of wheat from its godowns in Haryana and 5.4 lt from Punjab. Recently, the Government had approved exports of five million tonnes from the Central pool stocks by private exporters to make storage space for the new crop that’s being currently harvested.
However, exporters feel that shipments from the Government stocks were unviable at the price offered by FCI as the global prices have started softening. At current FCI’s price of Rs 14,840 a tonne, wheat for exports including the transportation and handling costs, would cost about $315 a tonne free-on-board, while the grain from Black Sea origin commands a lower price of around $280 .
Moreover, the availability of wheat at a lower price than the minimum support price (MSP) of Rs 1,350 in the mandis of the Uttar Pradesh has prompted the exporters to buy from the country’s largest wheat producing State.
In some of the mandis of Uttar Pradesh such as Baharaich and Haathras, wheat traded at around Rs 1,330- 1,340 a quintal, marginally lower than the minimum support price on Monday. Exporters, stockists and domestic millers have been actively buying from the UP mandis since the harvest has begun in the current season.
Exporters such as ITC, Emmsons International and Cargill among others have been actively buying from the UP market, where the Government’s procurement mechanism is relatively weak when compared to States such as Punjab and Haryana.
Though the private exporters have been demanding the Government to revise the floor price downwards in tune with the global market, the Centre is undecided on the issue. The re-tendering on Wednesday is expected to be on the same price of Rs 1,484 a quintal.
So far, the State trading agencies – STC, MMTC and PEC have totally exported about 3million tonnes of 4.5 million tonnes allowed from the Government stocks.
Wheat stocks with the Government stood at 24.2 mt as on April 1, and by June 1, the stocks are expected to rise to 62 mt as procurement is in full swing in Punjab and Haryana.
India's newest attempt to boost wheat exports and cut its bulging stocks by offering private traders the chance to buy direct from warehouses is likely to be spurned by most traders as they baulk at the costs of transportation and financing.
The world's No. 2 producer embarked on exports in September 2011 after a four-year ban as it sought space in stretched warehouses for bumper harvests, but has only managed to sell about 5 percent of what it produces in a year, partly because of its high prices.
It is now offering 5 million tonnes to private traders such as Cargill, Louis Dreyfus and Glencore
-- but even though global prices are rising on supply concerns, the high cost of Indian wheat may still be a deterrent.
State-run Food Corporation of India (FCI), the central grains procurement body, kicked off the process on Monday, inviting bids for about 1 million tonnes in total.
Pictures of rotting sacks of wheat protected only by tarpaulin and vulnerable to attack by rodents triggered widespread criticism last year of the government, which has promised to provide cheap food to its poor.
India has sold about 3.6 million tonnes of the 4.5 million tonnes put up for sale by tender through state-run traders, with the grain available conveniently at ports. But the cumbersome process and a high floor price of $300 a tonne has kept sales sluggish.
Its need to cut stocks, which were six times target at 24.2 million tonnes on April 1, is increasingly desperate as the new wheat harvest of over 90 million tonnes rolls in.
So now the government is going direct to traders, a different tack that it hopes will smoothen the process.
But it has set the floor price here at 14,840 rupees ($270) a tonne for traders' bids, which compares unfavourably to global prices that are around $280 free on board (FOB).
The government is under pressure to cut the floor prices. But New Delhi wants to hang on to these levels as it was offering 14,800 rupees per tonne to domestic bulk buyers. And even at these prices, it would mean it was selling at a loss -- given purchase, storage and local levies add up to 17,990 rupees per tonne.
Moreover, FCI wants private traders to lift stocks only from its warehouses in the states of Punjab and Haryana, the big-hitting wheat producers, and pick up transport costs to ports.
Obtaining the trucks and railway wagons to carry the grains could also prove tricky given India's creaky infrastructure but the government has taken the view in the past that its wheat exports should take priority.
With the arrivals of wheat picking up in key growing states of Punjab and Haryana, the Centre's grain purchase has risen by 12.5 per cent to 17.11 million tonnes so far in 2013-14 marketing season that started this month.
The wheat procurement stood at 15.21 million tonnes (MT) in the same period corresponding year. Procurement of wheat, a major rabi crop, begins from April and continues till June.
A sharp rise in arrival of the grain has increased the government's procurement in Punjab and Madhya Pradesh, while it is lagging in Haryana as on April 26.
Wheat arrival rose to 18.47 MT so far, as against 16.34 MT in the year-ago period. Wheat is being purchased at the support price of Rs 1,350 per quintal.
Wheat purchase in Punjab has increased to 7.5 MT so far, as against 5.4 MT in the year-ago period, according to data by state-run Food Corporation of India (FCI), the nodal agency for procurement and distribution of foodgrains.
In Madhya Pradesh, procurement has increased to 4.2 MT from 3.5 MT in the review period.
However, the procurement of wheat in Haryana lagged behind at 4.7 MT as on April 26 due to poor arrival. The wheat buy in the state stood at 5.4 MT in the same period last year.
The government is targeting to procure a record 44.12 MT of wheat in the ongoing 2013-14 season as production is expected to be 92.30 MT.
Besides the central agency FCI, wheat is also being procured by the state governments, cooperatives and others.
The government buys wheat from farmers at the minimum support price to meet demands under various welfare schemes like mid-day meal programme and also for buffer requirement
The Haryana government has increased the amount of interest-free wheat loan to its employees from Rs 10,000 to Rs 11,000 during the current financial year.
The move would benefit about 60,000 employees in the state, Finance Minister H S Chattha said, according to an official release here.
The loan is given to Class-IV employees, and Class III employees who are getting basic pay plus dearness allowance up to Rs 7,000 in pre-revised scale and up to Rs 8,000 in revised scale.
He said the loan would be recovered in 10 equal monthly instalments.
The wheat loan would not be sanctioned to work charge or daily wage employees or employees who are on deputation in Corporations or Local Bodies, he said, adding that in case both husband and wife are government employees, either of the spouse would be granted this facility.
Procurement of wheat by Government agencies has picked up as arrivals have gained momentum in States such as Punjab and Haryana.
In the Rabi marketing season, so far, the Government agencies have procured 11.94 million tonnes of wheat, about 30 per cent more than 9.23 mt in the same period last year.
In Punjab, the Government has procured 4.3 mt so far, more than double the 1.99 mt, it had procured last year.
The Government had procured 12.83 mt from Punjab last year, while overall procurement across the country stood at 38.14 mt.
In Haryana, the procurement, so far is marginally lower at 3.7 mt against last year’s 3.79 mt.
The Government had procured 8.66 mt of wheat from Haryana last year.
In Madhya Pradesh, the procurement this year is higher 17 per cent at 3.63 mt against last year’s 3.09 m t.
The Government had procured 8.49 mt last year from Madhya Pradesh.
However, in Uttar Pradesh, the country’s largest wheat producing State, the procurement by State agencies is still sluggish due to a weak procurement mechanism.
The Government agencies have bought about 75,765 tonnes of wheat in UP, almost half of last year’s 1.4 lakh tonnes.
The total wheat crop this year is expected to be higher than last year’s 93.9 mt and is pegged at around 96 mt.
The Centre expects to procure a record 44 mt, about 6 mt or 15 per cent more than 38.14 mt procured last year.
Wheat stocks with the Government stood at 24.2 mt as on April 1, and by June 1, the stocks are expected to rise to 62 mt.
Wheat procurement in Punjab reached 43.26 lakh tonne in the ongoing rabi marketing season.
Out of the total procurement, government procurement agencies procured 43.05 lakh tonne whereas private traders procured 21,728 tonnes of wheat.
Among agencies, Pungrain procured 7.66 lakh tonne, Markfed lifted 9.66 lakh tonne and FCI bought 7.52 lakh tonne.
Punjab is eyeing to procure 140 lakh tonne during the current season.
The Shiromani Akali Dal president and Punjab Deputy Chief Minister Sukhbir Singh Badal today demanded that the MSP for wheat be fixed at Rs 1500 per quintal with effect from this season.
He also demanded that the MSP of agricultural produce, including wheat and paddy, be either linked to the overall price index, with an automatic, in-built price-determination mechanism, or the farmers be paid the actual cost of production plus a minimum of 50% profit over that, as recommended by the eminent farm scientist and economist, Dr M S Swaminthan.
Badal said that demanding a mere bonus of Rs 200 per quintal as done by the Haryana CM Bhupinder Singh Hooda amounted to playing a “market fraud” on the farmers. “The basic price must be hiked.
Giving bonus only would mean that the MSP of the the farm products would remain unchanged even next year, and the agricultural costs and prices would be calculated only with just an annual incremental ratio. This would amount to putting the farmers at great disadvantage with respect to market realities.
Badal argued that every profession except that of farmers got an automatic annual raise. Famers are the only ones who have to agitate every year to bring prices of their produce in sync with the rising inflation,” said Sukhbir Singh Badal.
The Deputy CM further said that the center “must regard our demand for a Rs 5000 crore agricultural diversification grant to leading farming states like Punjab and Haryana as an investment in long term national security and for providing the much needed market stability to agriculture.
He said that Punjab had been demanding a market mechanism like MSP for maize and basmati as incentive for diversification. Punjab farmers are willing to move away from the wheat-paddy rotation; all they seek is an assured market and an MSP along the lines provided for wheat and paddy.
Badal said that farming no longer remained a remunerative profession. “This spells danger for food security in the country. The center needs to act immediately and provide incentive to agriculture sector along the same lines as provided in advanced countries like the USA. Otherwise, we are heading towards a serious economic imbalance and huge and dangerous crisis on the agricultural sector.” Said Badal.
Amid demands from traders to cut floor price of government wheat for exports, Food Corporation of India (FCI) today said global price of the grain is firming up and it is still feasible to undertake shipments.
Last month, the Centre had allowed export of additional 5 million tonnes (MT) wheat (of 2011-12 crop) from its godowns via private trade to ease storage burden. The export allocation was to be done via bidding process with floor price set at USD 274 per tonne (Rs 14,840) plus 12.5 per cent of local taxes.
"Traders are demanding reduction in the floor price. But currently, our wheat is sold at USD 304-306 per tonne, while Australia and the US wheat at USD 260 and 270 a tonne. Why our wheat is purchased above Rs 300 level? It is still feasible," FCI Chairman and Managing Director Amar Singh told PTI.
He noted that the global wheat prices fell sharply in the last one month but have started firming up now. "If international prices remain firm above USD 300 a tonne, it is feasible to export," he said.
The FCI has floated a tender for empanelment of traders for export of 5 MT of wheat. These empanelled traders will then participate in the FCI wheat tender to be issued next week, he added.
"We will issue tender for sale of wheat (2011-12 crop) to private exporters next week. We will sell wheat to the highest bidder among the empanelled traders," Singh said.
When asked what if it receives poor response to the tender, the FCI chief said, "We have 40 lakh tonnes of wheat from the 2011-12 crop. If exports do not happen, we can supply each month 7-8 lakh tonnes of wheat through PDS and clear it."
In a recent report, the US Department of Agriculture (USDA) had emphasised that India will have to explore measures for improving the viability of exports of FCI wheat given the historically unprecedented pressure of massive grain stocks and lack of sufficient storage space.
The report had also warned that expected foodgrains stocks of 90 MT by June 1 on higher procurement would pose an unprecedented storage crisis for the government. The current storage is estimated at around 71 MT.
Wheat production is expected to surpass last year's record of 93.90 MT in 2012-13 crop year (July- June).
India's State Trading Corp has received the highest bid at $304 per tonne from a global trader in its latest wheat export tender, trade sources said on Wednesday.
Last month, STC issued a tender to export 200,000 tonnes of wheat for shipments by June 20 from the western port of Mundra.
State-run companies such as MMTCBSE 0.23 %, STC and PEC have been floating export tenders to ship out wheat from overflowing government warehouses since July 2012.
In the last tender, on April 16, STC received the highest bid at $302 per tonne for grain from warehouses on the east coast.
India has held firm to a price of $300 a tonne for its wheat. Traders have argued this price was not competitive when compared with current market prices of around $275 a tonne but some had already sold on at higher levels and were bidding above this level to cover those sales.
India’s wheat exports are likely to touch a record high of 7.5 million tonnes in the current marketing year ending June 2013, on account of record crop and larger carry-over stocks, while many other exporting nations are expected to face tight supplies, an Food and Agriculture Organisation (FAO) report said.
In 2011-12 marketing year (July-June), shipments from the country remained lower, as wheat export was allowed via private trade only after lifting the ban on the same in September 2011, according to market experts.
“One striking feature of this season is the exceptional size of wheat exports by India, which are forecast to reach 7.5 million tonnes,” the FAO said in its latest report. Wheat shipments from India, the world's second biggest grower, are anticipated to surge on account of estimated record harvest and larger carry over stocks, it said.
To reduce stocks built up due to record harvest, India is encouraging export of government-held stocks. It has already allowed state-run firms to export 4.5 million tonnes of wheat. Recently, it permitted private traders to ship additional five million tonnes of the grain.
According to the FAO report, wheat plantings in India are around last year’s good level and another bumper crop is in prospect although forecast slightly below the 2012 record (93.90 million tonnes) because of limited rainfall in some important producing areas.
At global level, total wheat trade is expected to decline five per cent to 140 million tonnes in 2012-13, as against 147 million tonnes in the previous year, it said.
Russian Federation, EU, Australia are forecast to face tight supplies which will lead to reduced exports from these countries, but larger exports by India will help ease the market situation, the report added.
The expected sharp retreat in global wheat imports in 2012-13 reflects reduced purchases by several countries, namely, Afghanistan, Algeria, Egypt, Kenya, Saudi Arabia, Thailand, Turkey and Uzbekistan, it added.
India's State Trading Corp has received the highest bid at $302 per tonne from a Hamburg-based global trader in its latest wheat export tender, trade sources said on Tuesday.
Last month, STC issued a tender to export 70,000 tonnes of wheat for shipments by June 10 from the southern port of Chennai.
State-run companies such as MMTC, STC and PEC have been floating export tenders to ship out wheat from overflowing government warehouses since July 2012.
In the last tender from state firms, on April 12, MMTC received the highest bid at $302 per tonne for grain from warehouses on the east coast.
India has held firm to a price of $300 a tonne for its wheat. Traders have argued this price was not competitive when compared with current market prices of around $275 a tonne but some had already sold on at higher levels and were bidding above this level to cover those sales.
Wheat procurement in Punjab picked up momentum with government agencies and private millers procuring 3,65,512 tonnes of wheat till Monday evening. While government agencies procured 3,61,442 tonnes, private traders mopped up 4,070 tonnes.
Meanwhile, complaints have also started trickling in from farmers that they have not got their payment on time. However, government officials denied that payments were being kept pending. "We have directions to release money within 48 hours and it is happening," said an official of the food and civil supplies department.
The state government has deputed eight secretary-level officers to monitor the largest ever procurement operation. It has activated over 1,750 procurement centres and has also constituted dispute redressal committees at all these centres.
The food and civil supplies department has already established 24-hour control rooms in its headquarters at Chandigarh and also in district offices, where farmers could contact in emergency.
Punjab Mandi Board and food and civil supplies department have constituted teams for raids across the state during the purchase season. In case of any difficulty, farmers could directly approach these teams or the food and civil supplies department, sources said.
Indian state-run trading company MMTC Ltd has issued an international tender to export 50,000 tonnes of milling wheat, a company statement said on Friday.
The stocks will be available from government warehouses located at Kakinada port on the east coast of the country. The deadline for the tender is April 12 and the wheat is for shipment between May 5 and June 5.
India is considering lowering the floor price for wheat sales to private traders for export from state warehouses, government sources said on Thursday, after State Trading Corporation was forced to cancel a wheat export tender. [
State-run companies such as MMTC, STC and PEC have been floating export tenders to ship out wheat from overflowing government warehouses since July 2012
Targetting a record procurement of over 140 lakh tonnes this season, the Punjab government has set aside Rs.18,998 crore for wheat procurement this season.
A Punjab government spokesman said in Chandigarh Thursday said that as a part of the first installment, the state government has received Rs.13,529 crore from Reserve Bank of India (RBI) for the wheat procurement in the month of April.
Procurement in the agrarian state officially began April 1. Bulk stocks of wheat crop are expected to arrive in grain markets after the Baisakhi festival (April 13-14).
The spokesman said that the RBI will release the balance amount by April-end, which would be used for the wheat procurement in the months of May and June.
He said that elaborate arrangements have been made to make payment to the farmers within 48 hours of the procurement of their crop and lifting of the crop procured would be ensured after 72 hours of the procurement.
"Punjab is all set for achieving a new record in wheat procurement as the biggest ever procurement operation has begun," a spokesman of the food and supplies department said here.
According to state agriculture department, 161.59 lakh tonnes of wheat production is expected this year.
The state government will set up 1,770 procurement centres this time. The minimum support price (MSP) for wheat has been fixed at Rs.1,350 per quintal this time.
In 2012, Punjab had procured a record 129.35 lakh tonnes of wheat.
Over 95 percent of the wheat produced in the state is procured by government agencies. These include the Punjab government's Pungrain, Markfed, Punsup, Punjab State Warehousing Corporation and Punjab Agro Industries and the central government's Food Corporation of India (FCI).
Punjab is the biggest contributor (over 60 percent) of food grain to the national kitty despite having just 1.54 per cent of the country's geographical area.
Anticipating huge surge in wheat procurement this year, the government is considering options to encourage private traders to buy the grain directly from farmers, Food Minister K V Thomas said today.
"Let the private traders come and procure this time. We are working out a mechanism. We don't want to give signal that we will procure wheat for private parties," Thomas said on the sidelines of CII AGM here.
The government is aiming to buy a record 45 million tonnes of wheat in the ongoing 2013-14 marketing year, as against 38 million tonnes last year, he said.
"Our wheat requirement is 28-29 million tonnes. I was forced to procure 38 million tonnes wheat last year as private traders did not want to buy at minimum support price (MSP). Although our burden is huge, but we have to procure to ensure MSP to farmers," Thomas explained.
Private players had not been buying wheat directly from farmers for last two years due to higher taxes in states like Punjab. Also, they were waiting for the government agency FCI to procure entire wheat and sell later to private traders at lower rates via open market sale scheme (OMSS), he said.
Thomas also sought suggestions from the industry chamber CII on ways to encourage private sector in wheat procurement.
Allaying fears of storage crisis due to possible huge wheat buy, Thomas said, "It is a huge challenge. We have got enough storage. I am confident that we will manage this year."
Wheat procurement will start in fullswing after Baisakhi festival on April 14. So far, FCI has purchased over 5 lakh tonnes of wheat at the support price of Rs 1350 per quintal.
As on March 1, the Food Corporation of India (FCI) had foodgrains stocks of 62.8 million tonnes, of which wheat was 27.1 million tonnes. The storage capacity is 74 million tonnes.
The government's wheat purchase has been on the rise due to record output in the last two consecutive years. The wheat production this year is also expected to surpass last year's record 94.88 million tonnes.
Anticipating storage problems during the peak wheat procurement season, Agriculture Minister Sharad Pawar today said there is scope for exporting more wheat from FCI godowns to clear space for new crop.
In the 2012-13 fiscal, the government permitted 9.5 million tonne of wheat from FCI godowns. Of this, 5 million tonnes was allowed for exports by private players last month and is yet to be shipped.
“Wheat harvesting will start in full swing from 14 April. We are aiming to procure 45 million tonnes and there is last year’s stock of 9 million tonnes in FCI godowns. This is huge stock, where to keep, it should be exported,” said Pawar.
“We have to export more wheat from FCI godowns as stocks are expected to reach 54 million tonnes,” he said.
Stressing the need to fasten wheat shipments due to storage concern, the minister said, “Exports are delayed. We need to export fast so that some surplus stocks is reduced and space is available during peak harvesting period.”
Asked how much more wheat can be shipped, Pawar said, “I cannot say now. The food ministry should know.”
As on 1 March, Food Corporation of India (FCI) had total foodgrains stock of 62.8 million tonnes, of which wheat was 27.1 million tonnes. Storage capacity is 74 million tonnes.
FCI started procuring wheat at support price and so far purchased 5 lakh tonnes. It aims to procure 45 million tonnes this year as against 38 million tonnes in 2012-13 marketing year (April-March).
On impact of recent rains on wheat crop, the minister said that there is no impact on the crop and “I believe wheat output will be more than last year’s 94.88 million tonnes.”
Higher output is coming from Punjab, Haryana, Western Uttar Pradesh and Madhya Pradesh. “In Madhya Pradesh, area under crop is less but crop condition is good,” he said.
Pawar also mentioned that the crop condition of other crops like pulses and oilseeds was promising.
PEC Ltd received the highest bid at $307 per tonne from Switzerland-based trader Glencore for its 150,000 tonnes wheat export tender, trade sources said on Wednesday.
Last month, PEC floated two global tenders offering wheat from government warehouses located on the east coast for shipments by AprIL 30.
State-run trading firms such as PEC, State Trading Corp (STC) and MMTCBSE -2.87 % have been issuing export tenders to ship out wheat from overflowing government warehouses since July 2012.
In a separate tender, STC on Wednesday received the highest bid at $306 per tonne from global trader Toepfer in its latest wheat export tender.
Indian state-run trading company MMTCBSE -3.37 % Ltd has issued an international tender to export 65,000 tonnes of milling wheat for shipment in April, a company statement said on Tuesday.
The stocks will be available from government warehouses located at Pipavav portBSE -1.14 % on the west coast of the country. The bid closes on March 26.
The tender is part of an Indian government programme to cut huge wheat stocks.
For the first time in 45 years since its inception, the Food Corporation of India will focus on procuring export-quality wheat. The state agency plans to purchase superior grades from farmers in Madhya Pradesh and tender them for sales overseas.
FCI may also explore procurement from Punjab, Gujarat and Rajasthan in the coming months.
The initial tender for export is expected to be floated soon by staterun companies such as MMTCBSE 0.71 %, State Trading CorporationBSE 0.54 % and PEC, officials said. "We will be floating a tender by the second week of April for the export of high-protein wheat from Madhya Pradesh from the new crop," said Amar Singh, chairman and managing director, FCI.
Branded as Indian premium wheat, it will have a higher protein content at 12.5% compared to the current Indian standard of 11.5%. Gluten content will be higher by 7% at 28% compared to normal grains, said an official.
Gluten makes the grain suitable for milling and making bread. Wheat procurement from Madhya Pradesh is expected to begin in a day or two by FCI and state government agencies after which samples will be sent to the Directorate of Wheat Research, Karnal, to find the source of quality grains.
Importers have been demanding cleaner and fuller grains. On a trial basis, FCI has started cleaning grains being shipped from the Mundra portBSE -1.19 % in Gujarat.
FCI officials say grains sourced from the western parts of Madhya Pradesh like Indore, Ujjain and Bhopal followed by the Malwa belt of Punjab and the Saurashtra region of Gujarat are of superior quality. In the global market, prices have remained bearish. On CBOT, the May futures were being quoted at $255-$256 a tonne. In the spot market, soft red winter wheat was quoted at $290 a tonne FOB US ports.
Globally, different varieties of wheat are sold. Australia has six grades catering to Japanese style ramen noodles, European pan breads and Chinese yellow alkaline noodles. The US has five grades catering to the export market.
As on date, FCI has contracted 31. 80 lakh tonne wheat and shipped 25 lakh tonne. In March,it has shipped 4 lakh tonne. South Korea followed by Bangladesh, Ethopia and Yemen import Indian wheat. The government may explore selling wheat to Egypt and Sri Lanka, in the coming year.
The Indian government has proposed exporting wheat to Egypt and said it is ready to provide 'generous' financial facilities to encourage Egyptian imports, Egypt's Supply Minister Bassem Ouda told state-owned news agency MENA on Wednesday.
Ouda, speaking after a meeting with the Indian ambassador in Cairo, said the government would start assessing the quality of Indian wheat and include it on the list of commodities Egypt can import.
The minister said importing Indian wheat would be a 'positive' step, and that Egypt must learn from the success of India which used to be a wheat importer. In less than 10 years India was able to develop its agricultural sector and achieve a yearly wheat surplus of almost 16 tonnes.
Egypt is the world's biggest largest importer of wheat, importing an estimated 11.5 million tonnes per year.
The Government should be flexible about its wheat export price, given falling world prices and lack of storage.
There are three macro-models of wheat export approved by the Government. But none of these is supportive of accelerating shipments to accomplish export of 8-10 million tonnes (MT) in 2013-14 due to shifting market conditions.
These policies are as follows: The first entails export of 4.5 MT of FCI stocks of the 2012-13 crop through three PSUs, namely, PEC, STC, MMTC against international tenders, operationalised in August 2012. The second, declared on March 7, 2013, says private traders can export 5.0 MT of FCI wheat shipments of the oldest crop of 2011-12. The third, notified in September 2011, says that an unspecified quantity can be exported by the private/public sector from the open market.Indian wheat is competing against itself in the international market under these three schemes. But beyond May-June 2013, all three alternatives will substantially outprice the world’s falling prices. India needs to rework its pricing strategy.
Tenders of 4.1 MT have been issued since August 2012, and 3 MT approved in the price range of $296–328.00 fob/ tonne (average $310). An amount of 2.3 MT has been shipped and the balance 0.7 MT is pending for shipment, as of mid-March 2013.
But now a stalemate has been reached in an otherwise efficient implementation through PSUs. The internal guidelines of the Government advise a minimum export price (MEP) of $300/tonne (net realisation to FCI is approximately Rs 14,025 (or $255) after deducting rail freight and shipping cost/PSUs expenses from $300).
The Government, for the last six months, was comfortable in deciding tenders so long as “export” market was stable and “rising”, or relatively bullish. When the trend reversed in the second half of February 2013 to “falling” mode, uneasiness set in. The Government is “long” with 30 MT of wheat and 44 MT is to come in the next three months.
Normally, traders go “short” in descending trade. Risk is hedged in futures exchanges. But that is not the case with the FCI or Government. If it has opted to trade in commodities, it has to take an immediate call and be astute in bearish conditions, to salvage some realisation from sunk investment.
In end February and early March 2013, bids of 400,000 tonnes were rejected by authorities, either because the offers were below $300; even if some bids were above $ 300, they were below their expectations and thus ignored. Price discovery through a tendered process — that is marked to the market — is negated. Now 4,00,000 tonnes is re-tendered, which may again attract lower values in bearish market with shipments deferred till end-April or early May 2013. Lower price realisation can be explained, but explaining rejection of offers made at the best market prices and then re-contracting them at lower prices can be a more difficult task.
On March 8-9 soft red winter (SRW) wheat of US — the cheapest origin today — for April-May delivery was $283 fob/tonne — almost $20/tonne down in one month. The US Department of Agriculture report of March 8, 2013, projects exports from Russia, Ukraine and Kazakhstan at 28 MT in July 2013-June 2014.
Black sea cargoes for “August” delivery (new crop) are traded at $250 fob/tonne. It is therefore incumbent on authorities to accept bids below $300 /MT even if it means revisiting earlier policy decision.
This scheme envisages 5 MT exports of 2011-12 in the next three months. With harvesting of 2013-14 commencing April 2013, wheat of 2011-12 will be three years old. This is also an admission/confirmation that three-year-old stocks are available in the country.
Though it is a prudent initiative to liquidate the oldest (2011-12) stock, its price needs to be attuned downwards and cannot be equated to 2012-13 and 2013-14 grains.
Normally, old crop is discounted by $20-30 per tonne per year. Five million tonnes cannot be shipped out in three months due to the logistical constraints of rail cars and berthing and loading facilities at the ports.
The minimum release price announced by the Centre of Rs 14,800 per tonne ex-Punjab includes 14.5 per cent local tax, which translates into $315-320/tonne fob depending upon the dollar/rupee rate. Tradable fob value “abroad” till “end March” is $280 (Rs 15,400 per tonne) and subsequently $260 (Rs 14,300) or even lower. The existing floor price is not a workable option.
No country today, not even China, can dictate or define global supply or demand conditions, weather variations, speculative positions, currency movements and local politics, but it is up to trading nations to take advantage of this matrix mix. The world market does not permit recovery of unreasonable taxes imposed by the Punjab Government. A revenue of Rs 7,500 crore ($1.4 billion) can be generated by dispatching 5 MT at a market-friendly release price.
An export of 2 MT has been achieved under this route since September 2011. From April onwards, private players are monitoring developments in Uttar Pradesh, Madhya Pradesh, and Rajasthan to economise on freight cost and work on an MSP of Rs 13,500 per tonne.
This translates into an fob of $290.00 for delivery in April-May shipments. Deals of 1-1.5 MT may take place under this policy. If a steep decline in world wheat prices continues, open market operations will be unviable after May-June 2013.
The annual supply of wheat is 92-93 MT against domestic use of 76-78 MT. The Commission of Agriculture Costs and Prices has suggested Rs 13,500/tonne ex-Punjab as floor price for export and that efficiency of farmers should not blunted by the irrational tax structure in Punjab.
A carrying cost of $50/tonne per annum and “presumptive losses” for maintaining huge inventory should all be considered to redefine “flexible pricing” linked with international market movements.
A sum of Rs 15,000 crore ($2.8 billion) can be generated by exporting 10 MT from FCI’s stocks to reduce current and fiscal deficits. If domestic and international values remain misaligned, the US, Australia or Black Sea countries will gain the upper hand.
All policy pronouncements might remain on paper. The FCI will continue to be saddled with old perishable stocks with lack of storage for the new crop.
The Government has finally decided to open up its wheat stocks for private trade to export.
An inter-ministerial panel, headed by Agriculture Minister, Sharad Pawar, decided to allow an additional 5 million tonnes of wheat for exports from the Food Corporation of India stocks by the private trade.
Recognised private exporters will be allowed to export 2011-12 crop through a bidding process at a floor price of Rs 1,480 a quintal.
The latest move assumes significance as the country heads for yet another bumper wheat harvest that has created pressure for the Government to create storage space for the new crop.
However, analysts said the price fixed by the Government is not workable, as the global prices are on the decline.
“Assuming domestic freight from Punjab godowns to the ports, shipping, finance and other costs of Rs 2,500 a tonne, the export price at current exchange rate of Rs 54.78 translates to $315.8 a tonne f.o.b. Indian west coast”, said Tejinder Narang, grains analyst.
The workable price for export is $280 a tonne free-on-board (f.o.b.) for soft red winter wheat of the US.
“If the Government does not align the prices to the global market, buyers will shift to wheat of other origins,” Narang said.
He further added that India’s decision to offload more wheat could dampen global wheat prices further.
Wheat prices have declined by about five per cent in the past one week on expectations of better crop in Australia and improving weather in the US.
The Government has so far allowed exports of 4.5 million tonnes by the public sector entities such as PEC, STC and MMTC.
Of this, the PSUs have so far exported 2.3 mt and private players around 2 mt, taking the country’s total wheat exports to 4.3 mt.
The country is expected to produce wheat crop of 92.3 mt this year and the harvest is likely to begin by the month-end.
As on February 1, wheat stocks in the Central pool stood at 30.80 mt, against the actual requirement of 11.2 mt.
The Government aims to procure a record 44 mt in the 2013-14 rabi marketing season starting April.
The Cabinet Committee on Economic Affairs (CCEA) on Thursday referred the Food Ministry's proposal to allow export of additional 5 million tonnes of wheat from the central pool to a Group of Ministers (GoM), which will meet later in the day.
"Cabinet did not take any decision on wheat exports. The matter has been referred to the Group of Ministers (GoM) headed by Agriculture Minister Sharad Pawar," highly-placed sources said.
The meeting of the GoM, headed by Pawar, is scheduled in the evening at 1700 hours in Parliament, sources added.
The Food Ministry's proposal on allowing additional 5 million tonnes of wheat export from the government godowns is aimed at creating enough space for new wheat crop, which will be procured from this month-end.
To speed up exports to clear surplus stocks, the Ministry has proposed allowing recognised private traders to export the government-held wheat stocks along with state-run trading agencies such as MMTC, STC, PEC Ltd, sources said.
So far, the government has allowed export of 4.5 million tonnes through public sector trading agencies. Of this, about 2 million tonnes has already been shipped in a price range of USD 295-330 a tonne.
The government had over 30 million tonnes (MT) of wheat stock in godowns of the Food Corporation of India (FCI) at the beginning of last month, as against the actual requirement of 7 MT at the end of this month.
The wheat stock has piled up in the government godowns due to record procurement following bumper crop in the last two years. The government is aiming to procure a record 44 MT in the 2013-14 marketing year starting April.
Wheat production touched all-time high of 94.88 MT in 2011-12. Production is estimated to be 92.30 MT this year.
India, the world’s second-biggest wheat grower, formed a ministers’ panel to consider additional exports from state inventories to make room for a near-record harvest starting next month.
The panel will include Food Minister K.V. Thomas, Finance Minister Palaniappan Chidambaram and Agriculture Minister Sharad Pawar, Thomas told reporters in New Delhi today after a cabinet meeting that considered a proposal to permit exports of 5 million metric tons from state reserves. The ministers will meet later today, Pawar told reporters.
Shipments from India are adding to global supplies even as Australia predicts a 13 percent increase in its harvest, snow water replenishes U.S. soil moisture, the biggest shipper, and Argentina eases curbs on exports. Sales from India may reach 10 million tons in the year from April 1, according to New Delhi- based National Centre for Agricultural Economics and Policy Research. That along with forecasts for record rice inventories among the biggest exporters may contain world food costs that have tumbled 12 percent from an all-time high in 2011.
“India has got four to five months for exports until the northern hemisphere crop comes into the market in August and September,” said Vijay Iyengar, managing director of Agrocorp International Pte., a Singapore-based trader. “Countries in Asia, Africa and the Middle East will buy Indian wheat.”
Record harvests expanded state wheat stockpiles in India by 32 percent to 31 million tons at the start of February, forcing the government to allow shipments of 4.5 million tons by state companies since July. The food ministry first proposed additional exports in January.
Exports from India may total 5 million tons in the year ending March 31, with sales mostly to Southeast Asia, the Middle East and Africa at prices ranging from $305 a ton to $315 a ton, displacing supplies from Ukraine and Australia, Veena Sharma, secretary of the Roller Flour Millers Federation of India, said yesterday. The country is boosting shipments as prices trade near eight-month lows after crops improved globally.
Futures have fallen 28 percent in Chicago since reaching a four-year high of $9.4725 in July. The contract for May delivery rose 0.3 percent to $6.8575 a bushel on the Chicago Board of Trade at 11:03 a.m. in Mumbai. Prices fell to $6.80 yesterday, the lowest since June 22.
“The global wheat price looks bearish, so India should export as early as possible,” said Vandana Bharti, assistant vice president at New Delhi-based SMC Comtrade Ltd. “Though it is bearish globally as it will add to the surplus, the Indian market looks bullish.”
Farmers in India will harvest 92.3 million tons starting April 1, near the record 94.9 million tons a year earlier, according to the farm ministry. The government plans to boost purchases from farmers to 44 million tons this year from 38.1 million a year earlier, the food ministry said Feb. 19.
The Cabinet is likely to allow private players to export wheat from choked government warehouses. A decision in this regard may be taken by the Cabinet Committee on Economic Affairs when it meets on Thursday. The government is planning to export 5 million tonne wheat to clear the stock in addition to 4.5 million tonne already approved by the Cabinet, taking the tally to 9.5 million tonne this year ahead of the new harvest season.
The floor price will be determined by the inter-ministerial panel headed by Commerce Secretary S R Rao. Agriculture minister Sharad Pawar said the Cabinet meet on Thursday was likely to discuss ways to boost exports to trim overflowing stocks. This will be the largest ever export after 2002-03 when the government sold 7.30 million tonne in global markets through public sector units and private traders.
"Since the quantity is large, public sector companies alone will not be able to ship the grain fast. We have asked the Cabinet to allow private traders to participate in shipping wheat from government warehouses," said a senior food ministry official. According to the proposal, recognised private traders along with state-run trading companies such as MMTCBSE -1.59 %, STC and PEC will be permitted to sell globally.
Currently, international traders from Concordia, Toepfer, Louis Dreyfus, StarcomBSE 5.00 %, Glencore and Cargill are procuring Indian wheat. The government has allowed exports of 4.5 million tonne (MT) through public sector trading agencies out of which about 2 million tonne has already been shipped in a price range of $295-$330 a tonne. The country is likely to harvest yet another bumper crop this year due to a favourable weather.
The government expects the output to beat last year's record of 93 million tonne. "We have set a target of procuring 44 million tonne wheat and we need space for the new harvest," the official said. As on February 1, the wheat stock in the central pool was 30.80 million tonne against the requirement of 11.2 million tonne.
Agriculture minister Sharad Pawar said the food ministry proposed that the surplus wheat with the Food Corporation of India (FCI) should be exported. This proposal is a part of the agenda for discussion in the Cabinet, which will take the final call on this issue.
“Approximately Rs 1.87 lakh crore worth of rice, wheat, sugar, etc. were exported last year. The food ministry proposes the export of stocked wheat with FCI, while the decision would be taken by the Cabinet,” he said at a press conference on the sidelines of the national conference for evolving the strategy for maximising kharif production, which commenced in New Delhi on Wednesday.
Pawar said that the decision would be taken after due consideration, as the government cannot risk the shortage of foodgrains in the country. He added that the progress of the monsoon would be kept in mind whle taking the call.
The Kharif season will commence shortly and FCI is already stocked with the foodgrains, so the food ministry has timed the proposal right. According to figures available with FCI, the stock position of wheat as on February 1, 2013 was 110.47 million tonne. And this year as well, the ministry expects bumper production, for which the advance estimate is 250.64 million tonne.
On the issue of alleged irregularities in the United Progressive Alliance's (UPA) Rs 52,000-crore loan waiver scheme, Pawar said what went wrong in identifying the eligible farmers is still being investigated.
“Two things came out in the Comptroller and Auditor General of India's (CAG) report. Firstly, a certain percentage of farmers who were not eligible benefited, while a certain percentage of eligible farmers could not get the advantage of the waiver. It appeared that some mistake occurred while preparing the list of farmers,” he said.
Pawar added that when the preliminary report regarding auditing of 90,576 accounts out of a total of 3.7 crore accounts were given to the finance ministry.
“It sent communications to the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (NABARD) to audit all the accounts as soon as possible and submit the list of farmers who were eligible but could not avail the waiver,” the minister said.
Pawar also informed that the ministry is in talks with states regarding the diversification of crops. He said the two-crop pattern must be changed to introduce cultivation of crops like pulses and oilseeds, which would help in maintaining the texture of the soil.
“The states have suggested that incentives should be given to the farmers, and this year’s Budget has already earmarked funds for crop diversification,” he said.
Consolidating 11th Plan gains
The conference began with a call by Pawar to focus on consolidating the gains made in the Eleventh Five-year Plan and become equipped to face the new and emerging challenges.
He stated that the annual growth rate for agriculture and allied sector during the Eleventh Five-year Plan jumped to 3.64 per cent from 2.5 per cent in the Ninth Five-year Plan and 2.4 per cent in the Tenth Five-year Plan. This growth was achieved in spite of the drought in 2009-10 and drought-like conditions in some parts of the country in 2010-11.
Pawar also expressed satisfaction at the achievements of flagship programmes such as the National Food Security Mission (NFSM), the National Horticulture Mission and Bringing Green Revolution to Eastern India (BGREI).
He said, “Against a target of an additional production of 20 million tonne of foodgrains, the NFSM was able to achieve 42.04 million tonne of additional production of foodgrains (from 217.28 million tonne in the pre-NFSM year of 2006-07 to 259.32 million tonne in 2011-12). Horticulture production has recorded an average annual growth rate of 5.5 per cent during the Eleventh Five-year Plan.”
“We must ensure that the NFSM not only continues to ensure food security through enhanced foodgrain production, but also helps in ensuring protein requirements are met through enhanced pulse production. Simultaneously, efforts for bridging the yield gaps in low-productivity areas like the eastern states and rain-fed areas have to be made on a bigger scale,” Pawar said.
“It gave me immense joy when I learnt that against an average production of 42.60 million tonne of rice in the seven eastern states – Assam, Bihar, Chhattisgarh, Jharkhand, Odisha, Eastern Uttar Pradesh and West Bengal – prior to the launch of BGREI, the production increased to 46.97 million tonne in 2010-11, 55.27 million tonne in 2011-12, and 55.62 million tonne in 2012-13,” the minister said.
He added, “This means that these eastern states are now contributing more than 50 per cent of the country’s total rice production, and thus the efforts in ushering green revolution in this region has taken strong roots. I congratulate the officials of these states present here for this outstanding performance and urge them to aim at attaining greater heights.”
Pawar said it is now time to go beyond the east to north-east India, adding, “We have already covered all the states of north-east India under NFSM-RICE, and the results are encouraging. The potential of this area for horticulture plantation and other commercial plantation such as rubber, oil palm, etc. need to be explored.”
“I would like to appeal to the officials from these states to come forward and use the flexibility offered by RKVY to the fullest possible. The officials in my ministry will always be ready to provide any guidance or assistance required,” the minister added.
He also expressed the hope that a number of provisions made in the Union Budget for agriculture will support this sector well. He made special mention of the higher allocation for agriculture, setting the target of agricultural credit to Rs 7 lakh crore, and allocations for crop diversification, farmer-producer organisations and the National Livestock Mission.
The conference is being attended by senior officers of state agriculture departments, representatives of different Union ministries and the Planning Commission, experts and scientists from the Indian Council of Agricultural Research (ICAR), other research institutes and crop directorates.
Krishi Vigyan Mela inaugurated
Inaugurating the Krishi Vigyan Mela, an event co-located with the conference, Pawar called for the introduction of innovative farm technologies that could be easily adopted by the farmers and are essential for enhancing farmer’s prosperity.
He said, “The adoption of appropriate and farmer-friendly technologies has remained the weakest link in Indian agriculture, and I hope, by organising Vigyan Melas like this, we would be able to address this gap.”
Pawar added, “The key to the success of agriculture lies in transferring the knowledge and technologies developed by the agricultural scientists in their laboratories to the farming communities in their fields.”
He said that due to the hard work of the Indian farming community, the country's agriculture sector has emerged a success story. “We have not only achieved self-sufficiency in foodgrain production, but also emerged as a major player in the international trade. Our export of wheat and rice ensured that the international prices of these commodities remain stable,” he added.
Stating that the problems like water scarcity, small land holdings, erratic monsoon and adverse drought conditions – which hamper agricultural productivity – have to be addressed, Pawar said, “The government of India is doing its best to solve these problems through various programmes and schemes targeted to the agricultural and allied sectors.”
“However, all agricultural research, development and extension organisations must come together to meet these challenges and convert them into opportunities. I see no reason why we cannot overcome these challenges,” the minister said.
Tariq Anwar, minister of state for agriculture; S Ayyappan, secretary, Department of Agricultural Research and Education (DARE) and director general, Indian Council of Agricultural Research (ICAR), dignitaries of the Indian Agricultural Research Institute (IARI), scientists, students and farmers from across the country also attended the mela.
The Cabinet Committee on Economic Affairs is likely to consider the proposal to allow export of additional 5 million tonne of wheat from the government godowns to clear surplus stock ahead of arrival of new crop, Agriculture Minister Sharad Pawar said today.
"The proposal on wheat export is on the agenda of tomorrow's CCEA meeting. Let's see what will happen," Pawar told reporters on the sidelines of 'Krishi Vighyan Mela'.
The move is aimed at creating enough space to accommodate new wheat crop, which will be harvested from this month-end.
The proposal is also to permit recognised private traders to export the government-held wheat stocks along with state-run trading agencies such as MMTC, STC, PEC Ltd, sources said.
So far, the government has allowed export of 4.5 million tonnes (MT) through public sector trading agencies. Of this, about 2 MT has already been shipped in a price range of $295-330 a tonne.
The floor price will be determined by the inter-ministerial panel, headed by Commerce Secretary S R Rao.
Sources said that additional exports would ease storage pressure in Punjab, Haryana and Madhya Pradesh. As on February 1, the wheat stock in the central pool was 30.80 MT, as against the actual requirement of 11.2 MT. Much of it is lying in these three states.
The wheat stock has piled up in the government godowns due to record procurement following bumper crop in the last two years.
The government is aiming to procure a record 44 MT in the 2013-14 marketing year starting April.
Wheat production touched all-time high of 94.88 MT in 2011-12. Production is estimated to be 92.30 MT this year.
India has exported 4.03 million tonnes of wheat so far in the current fiscal, of which more than half of the grain was government-held stock, Parliament was informed today.
In September 2011, wheat export was permitted under Open General Licence (OGL) in view of sufficient supply due to bumper crop, while the overseas sale of government-held wheat stock was allowed in June 2012.
"During 2012-13 till February 22, a quantity of 4.03 million tonnes of wheat has been exported," Food Minister K V Thomas said in a written reply to the Rajya Sabha.
Of which, 2.07 million tonnes of wheat stored in the government godowns were exported through state agencies, while 35,000 tonnes of grain shipped to Afghanistan as humanitarian aid, he said.
In 2011-12 fiscal, the country had exported 7,41,000 tonnes of wheat, out of this 1,00,000 tonnes of the grain was exported from the Central pool as humanitarian aid to Afghanistan, he added.
The government-held wheat stock was not exported in 2009-10 and 2010-11 financial years.
Stating that the government has sufficient stock of wheat, Thomas said as on February 1 of this year, the stock of wheat in the central pool is 30.80 million tonnes, against the actual requirement of 11.2 million tonnes.
On wastage of foodgrains stocks in the state-run Food Corporation of India (FCI), the Minister said a quantity of 1454.27 tonnes of foodgrains has been accrued as damaged/ non-issuable as on Feburary 22 of the current fiscal.
A total of 16,386 tonnes of foodgrains was non-issuable /damaged in the last three years in FCI, he said responding to a separate query.
Foodgrains are overflowing in the FCI godowns due to record procurement following bumper crop of 259.32 million tonnes in the 2011-12 crop year (July-June). Of which, wheat output stood an all-time high of 94.88 million tonnes, while rice at 105.31 million tonnes
India's state-run State Trading Corp has issued a tender to export 70,000 tonnes of wheat, a company statement said on Thursday.
The bid closes on March 12. The company is offering wheat stocks from the government warehouses located at Chennai port on the east coast for shipment between March 20 and April 20.
The government is exporting wheat from its warehouses to cut bulging stocks after bumper harvest since 2007 swell supplies.
Bangladesh last year imported about 3 million tonnes (mt) of wheat from Russia, Ukraine (1.0mt), Canada/Australia (0.9 mt), while India’s contribution--- which is flush with huge stocks -- has been minimal (0.5 mt).
Though there is regular cross-border export of wheat to Bangladesh by the medium-sized traders, import on Government and private account via Chittagong and Mongla port of approximately 2.5 mt per annum takes place from all origins. This includes a tendered annual import of Director General, Department of Food (DG Bangladesh) of approximately 800,000 tonnes. India should actively exploit this market for better “fob” value realisation, as logistics costs would be the least; there are no quarantine concerns like Iran/Egypt and payment arrangements are fairly smooth.
In 2010, the Bangladesh government made an official request for import of 300,000 tonnes of rice and 200,000 tonnes of wheat from Food Corporation of India (FCI). However, the terms of trade offered by FCI were “as it where is” basis from warehouses at port towns. It took no liability on account of quality, quantity shortage and transit loss after the material was de-stocked. The Bangladesh government had desired supplies on delivered basis — (C&F Liner out shipments); 90 per cent payment against shipping documents and 10 per cent payment after quality and quantity are contractually complied with, or pro rata deduction thereof. The Indian and Bangladesh governments, respectively, represented by three PSUs (STC, PEC, MMTC) and DG Bangladesh could not arrive at a compromise. Repeated requests made by the Bangladesh government for supply of grains could not be appropriately responded to by the Indian side. Bangladesh feels let down by this episode.
During 2010-12, the aggressive bidders/shippers in “DG Bangladesh” tenders were international traders based in Dubai, Singapore, Bangkok, who sourced wheat from diverse origins. (Most MNCs have stayed away from Bangladesh Government wheat tenders.) However, upon execution of the contracts, they discovered that there was an extra cost of $10-12/ tonne, which remained unforeseen (at the time of bidding) for deemed contractual non-compliance. The option was either to perform at a loss, or abandon implementation by allowing the Bangladesh Government to encash their performance bank guarantee.
After losing money, these traders have withdrawn from their aggressive posturing in tenders, while new kids on the block-- South Korean trading firms and some other companies --- are bidding for Indian/third country wheat at $12-15 below performing price. They might also face a similar situation like their predecessors, unless they see major bearishness in coming months. The chances are that Bangladesh may not be able to import the contracted quantity, but may be content with monetary compensation by invoking bank guarantees. The objective of any Governmental institution should be to secure its food supplies, rather than to be in the business of making money out of defaults. Therefore, there is an immediate need on the Bangladesh side to correct these procedural wrangles.
The “South Korean” model necessitates the involvement of two intermediaries and two additional banks in a string of seven parties, while the normal trade flow comprises three entities. A local trader in Bangladesh assigns the contract to his foreign principal. Extended intermediation is meant to mitigate risk exposure due to quality or quantity claims, after wheat is discharged at ports in Bangladesh and for expediting 10 per cent payment/ release of bank guarantees. This risk premium induced by extreme contractual cautiousness reduces FOB realisation of the supplier. It also adds additional cost burden to the Bangladesh government and extra banking cost. The prospects of supply of poor quality grains also increase. The net effect is that the Bangladesh Government acquires feed quality /low grade wheat, though payments appear to be made for good milling wheat.
For private wheat imports by Bangladesh, Singapore/Australian traders have an edge because they can offer 180 days secured or unsecured credit at better terms. That may not be possible for Indian players.
However, for efficient trade flow for official imports the Indian side has to be flexible as well. The way out is simple: (a) GOI/private trade should be willing to supply wheat to Bangladesh on C&F Liner Out delivered basis and (b) Bangladesh government should accept quality/quantity final at load port (c) a performance guarantee of 5-10 per cent may be held as security for contractual performance, instead of the existing provision of making 90 per cent payment against the shipping document, and holding 10 per cent payment till quality issues and performance bank guarantee are finalised.
Such a procedure would be cost effective and pave the way for much greater bilateral co-operation.
To improve the production and yield of different crops, a number of Crop Development Schemes are being implemented through the government of different states in India, as stated by Tariq Anwar, minister of state for agriculture and food processing industries in a written reply to a question in the Rajya Sabha.
These include the National Food Security Mission (NFSM), the Integrated Scheme on Oilseeds, Pulses, Oil Palm and Maize (ISOPOM), the Technology Mission on Cotton (TMC), the Jute Technology Mission (JTM), the Integrated Cereals Development Programme (ICDP) for rice, wheat and coarse cereals, the Sustainable Development of Sugarcane-Based Cropping Systems Areas (SUBACS) under Macro-management of Agriculture (MMA), the Rashtriya Krishi Vikas Yojana (RKVY), Bringing Green Revolution to Eastern India (BGREI), the Initiative for Nutritional Security through Intensive Millets Promotion (INSIMP), the Accelerated Fodder Development Programme (AFDP), the Special Programme on Oil Palm Area Expansion (OPAE), vegetable clusters, the National Horticulture Mission (NHM), etc.
Anwar said the implementation of the Crop Development Programmes has boosted the production primarily through an increase in yield of crops. The total foodgrain production in the country has increased from 217.28 million tonnes in 2006-07 to 259.32 million tonnes in 2011-12, resulting in an 18.39 per cent increase in yield of total foodgrains. During this period, the rice yield went up by 12.29 per cent, the wheat yield increased by 17.31 per cent, and that of pulses increased by 14.21 per cent.
Similarly, the production of horticulture crops increased from 191.81 million tonnes in 2006-07 to 257.28 million tonnes in 2011-12. Between 2006-07 and 2011-12, the production of oilseeds increased from 24.29 million tonnes to 29.80 million tonnes (which indicates a 23.68 per cent increase), the production of cotton increased from 22.63 million bales to 35.20 million bales (a 16.63 per cent increase), the production of jute and mesta increased from 11.27 million bales to 11.40 million bales (a 5.20 per cent increase) and that of sugarcane from 355.52 million tonnes of cane to 361.04 million tonnes (which shows a 29.55 per cent increase).
India's wheat exports are likely to grow by 23 percent to 8 million tonne in the marketing year starting April due to strong global prices and surplus domestic supply, according to a report. The country had shipped 6.5 million tonne wheat last year, with maximum stock exported from government godowns.
Also Read: Refined Soy Oil Mar Fut may test Rs 714-716: Emkay
Ban on wheat exports was lifted in September 2011, but shipments took off strongly only after August 2012. "Assuming continued exports of wheat from government stocks and export price parity for Indian wheat vis-à-vis other origins, wheat exports during 2013-14 marketing year are forecast to increase to 8 million tonne," the US Department of Agriculture (USDA) said in its latest report.
Of this, 5 million tonne wheat will be from government side, while 3 million tonne will be sourced from open market by private traders, it said. Indian wheat has been very price competitive in the global market, particularly after the government allowed exports of wheat from its godowns in July 2012, it added.
According to the USDA, exports of government-held stocks are likely to continue unabated this year due to tight storage facilities, while the government will be under tremendous pressure to clear stock to accommodate the new crop. "The government is likely to continue to liquidate additional wheat stocks in the export market in 2013-14 and possibly 2014-15" also because current international prices are significantly higher than the domestic prices, it said.
However, any significant weakening of global wheat prices may adversely affect export prospects, USDA cautioned. Despite the government's efforts to offload wheat in the domestic and export markets, government-held wheat stocks on February 1, 2013, were estimated at 30.8 million tonne, compared to 23.4 million tonne in the year-ago period.
Wheat stocks in government godowns have piled up due to record production in the last two consecutive years. This year too, the country is set for a near-record wheat harvest of 92.3 million tonne on strong planting and favourable growing conditions.
The government's wheat purchase is expected to reach 44 million tonne (MT) in the 2013-14 marketing year starting April, surpassing last year's record of 38.1 million tonne, Food Minister K V Thomas said on Tuesday.
This year, wheat procurement is expected to increase by over 15 per cent despite marginal fall in output by 2.6 million tonne to 92.3 million tonne. Procurement of wheat, a major rabi crop, begins from April and continues till June.
The government is gearing up to buy wheat at the minimum support price (MSP) of Rs 1,350 per quintal from farmers by increasing purchase centres from Rs 10,000 to 12,000, Thomas said.
Also, the states have been asked to make available adequate funds for procurement agencies and farmers should be paid via cheque.
The Cabinet Committee on Economic Affairs (CCEA) is likely to approve tomorrow a proposal to raise the minimum support price (MSP) of wheat by Rs 115 per quintal to Rs 1,400 for the next year starting April 2013.
"The CCEA is scheduled to meet tomorrow. There are two items on the agenda including the MSP of rabi crops," sources privy to the development said.
As against the recommendation of the Commission for Agricultural Costs and Prices (CACP) which had suggested no hike, the Agriculture Ministry has proposed an increase in the wheat MSP by Rs 115 per quintal to Rs 1,400 for 2013-14 marketing year, as against the Rs 1285 per quintal this year.
The CACP, which advises the government on pricing policy for major farm produce, had recommended freezing of wheat MSP at last year's level.
Citing reasons for proposing a hike in wheat MSP, the Agriculture Ministry said the price of diesel has been raised by Rs 5 per litre after the CACP submitted its report.
Hence, the increase in MSP is required to compensate farmers, sources said.
The ministry also feels that the MSP proposed by CACP are generally lower than those suggested by states. Freezing of wheat MSP proposed by the CACP may not give positive signal to the farming community, sources added.
Besides wheat, the ministry has also recommended increase in MSP of other rabi crops -- barley, gram, masur, mustard seed and safflower.
The Agriculture Ministry has recommended raising the support price of gram and masur to Rs 3,200 per quintal each for 2013-14 to reduce the country's dependence on import of pulses. This year, MSP of gram and masur stood at Rs 2,900 per quintal, respectively.
Similarly, the ministry has suggested increasing the support price of mustard seed to Rs 3,000 per quintal from Rs 2,500 per quintal and safflower to Rs 2,800 per quintal from Rs 2,500 per quintal in the review period. It has proposed raising the MSP of barley to Rs 1100 per quintal for 2013-14 from Rs 980 per quintal this year, sources added.
Due to better support price and good monsoon, the country had harvested a record 93.90 million tonnes of wheat this year. The Agriculture Ministry hopes to achieve new record production this year as well.
At a time when rising wheat prices are already forcing flour makers to increase prices, the Union Food Ministry’s decision to impose statutory and freight charges on the wheat sold in the open market by the Food Corporation of India (FCI) will put additional pressure on millers.
The branded and non-branded flour makers across India confirmed the ministry’s decision would drive up wheat flour prices. Wheat prices in the open market have gone up nearly 35 per cent in last two months on FCI’s open market sale policy changes and export demand.
With the hike in statutory and freight charges, FCI’s wheat prices will certainly go up and hence, revised reserve prices for the open market sale will increase. For the southern mills, prices will be even higher.
Sources in branded flour segment like ITC (Ashirwad atta), Dash Foods Ltd (Shakti Bhog), Bhawani Roller Flour Mill (Risshta brand) confirmed that as the reserved price is being revised, the market will adjust to the new price benchmark. All are waiting for the final notification on it.
"A price revision of wheat flour is inevitable because the industry is already surviving on thin margins," said Adi Narayan Gupta, director of Bhawani Roller Flour Mill.
FCI bears approximately Rs 18.20 per kg of storage and handling charges of wheat and the statutory charges include the levies like mandi fee and labour charges. The statutory charges, according to sources, would be imposed in four wheat producing states--Punjab, Haryana, Uttar Pradesh and Madhya Pradesh. The millers in all other states would buy wheat inclusive of freight charges.
The consistent increase in wheat price due to exports of wheat to meet international demand at a lucrative price of about Rs 1,700 per quintal has affected the availability of wheat for the domestic flour millers.
The reserve price of wheat was Rs 1,285 per quintal till now and it may increase by Rs 200 or more per quintal in the four northern states, where statutory charges have been imposed, confirmed officials from FCI. "We are in the process of calculating the exact revision in wheat price," said one official.
The flour millers in north lamented that they would be at a disadvantage. According to R K Garg, president of the Confederation of Roller Flour Millers of Northern Zone: "Despite being located in the wheat basket of the country, we will not get any cost advantage".
The millers in southern states rue there should be a level-playing field for wheat.
According to Vinod Bansal, director of Bansal Flour Mills Pvt Ltd, Bangalore: "The allocation of wheat to Karnataka is 9000 tonnes. This is too less to match our capacities. The demand of wheat flour in the south is on the rise. The wheat by-products like finilina (suji) are also used in substantial quantities here. The increase in wheat reserve price would affect us badly."
The discriminatory price regime, said Garg, would encourage unhealthy business practices.
"The industry is not against any price revision. But there should be a level-playing field. The end consumer will have to pay more as the industry is running on razor-thin margins and cannot absorb the increase in reserve price," said Vinod Kapoor, a veteran in the wheat flour business from Chandigarh.
A total of 2.53 million tonnes (mt) of wheat has been exported so far through private trade since shipments of the key food staple were allowed in September 2011, Parliament was informed Tuesday.
The government had permitted exports of wheat under the open general licence (OGL) from September 9, 2011.
"Of the total production of wheat in the country of 93.9 million tonnes during crop year 2011-12, the quantity of wheat exports under OGL between the period September 9, 2011 to August 28, 2012 is 2.53 million tonnes only," Food Minister K V Thomas said in a written reply to Lok Sabha.
Crop year runs from July to June.
The government has also offloaded surplus stocks of wheat in the open market to increase availability of the grain and ease its storage problems.
Thomas added that the government has decided to release 3 mt of wheat and an additional 3.02 lakh tonnes of the grain from previous Open Market Sale Scheme (OMSS) balance for sale to bulk consumers and traders for open market sale from July, 2012 onwards.
"Government has so far released 2.60 million tonnes of wheat for tender sale to bulk consumers and traders by Food Corporation of India (FCI) under OMSS (Domestic) during the period from July, 2012 to August, 2012," the minister said.
The government has procured 38.15 mt of wheat in the last crop year, Thomas said.
In a separate query in the Lower House, Minister of State for Agriculture Harish Rawat said wheat exports were banned on February 2, 2007 to stabilise its prices in the domestic market and to maintain sufficient stock of the grain.
The Commission for Agricultural Costs and Prices (CACP) in its Rabi Price Policy Report for 2012-13 had suggested that up to 3 mt of Fair Average Quality (FAQ) wheat could be kept open for export, Rawat added.
Global food prices soared by 10 per cent in July from a month ago, with maize and soybean reaching all-time peaks due to an unprecedented summer of droughts and high temperatures in both the United States and Eastern Europe, according to the World Bank Group's latest Food Price Watch report.
From June to July, maize and wheat rose by 25 per cent each, soybean by 17 per cent, and only rice went down, by 4 per cent. Overall, the World Bank's Food Price Index, which tracks the price of internationally-traded food commodities, was 6 per cent higher than in July of last year, and 1 per cent over the previous peak of February 2011.
"Food prices rose again sharply threatening the health and well-being of millions of people," said Jim Yong-Kim, president, World Bank Group. "Africa and the Middle East are particularly vulnerable, but so are people in other countries where the prices of grains have gone up abruptly."
Overall, food prices between April and July continued the volatile trend observed during the previous 12 months, which halted the sustained increases between mid-2010 and February 2011. Prices increased in April, came down in May and June, and sharply increased in July.
Sharp domestic price increases have continued in this quarter, especially in Africa. Sub-Saharan Africa, in particular, experienced the highest price increases in maize, including 113 per cent in some markets in Mozambique. Meanwhile, the Sahel and eastern Africa regions experienced steep price increases of sorghum: 220 per cent in South Sudan, and 180 per cent in Sudan, for instance.
According to Food Price Watch, weather is the critical factor behind the abrupt global price increases in July. The drought in the US has resulted in vast damages to the summer crops of maize and soybean, for which the country is the world's largest exporter. Meanwhile, the dry summer in the Russian Federation, Ukraine, and Kazakhstan has contributed to projected wheat production losses.
The abrupt food price increases turned favourable price prospects for the year upside down. World Bank experts do not currently foresee a repeat of 2008; however, negative factors -- such as exporters pursuing panic policies, a severe El Nino, disappointing Southern Hemisphere crops, or strong increases in energy prices - could cause significant further grain prices hikes such as those experienced four years ago.
Droughts have severe economic, poverty and nutritional effects. In Malawi, for instance, it is projected that future severe droughts observed once in 25 years could increase poverty by 17 per cent, hitting rural poor communities the hardest. And in India, dismal losses from droughts occurred between 1970 and 2002 to have reduced 60-80 per cent of households' normal yearly incomes in the affected communities.
"We cannot allow these historic price hikes to turn into a lifetime of perils as families take their children out of school and eat less nutritious food to compensate for the high prices," said Kim. "Countries must strengthen their targeted programmes to ease the pressure on the most vulnerable population, and implement the right policies."
"The World Bank has stepped up its support to agriculture to its highest level in 20 years, and will keep helping countries respond to the food price hikes," continued Kim.
The World Bank's support for agriculture in fiscal year 2012 was over $9 billion - a level not reached in the past two decades. The Bank is also coordinating with UN agencies through the High-level Task Force on the global food security crisis and with non-governmental organisations, as well as supporting the partnership for Agricultural Market Information System (AMIS) to improve food market transparency and to help governments make informed responses to global food price spikes.
Should the current situation escalate, the World Bank Group stands ready to go even further to assist client countries protect the most vulnerable against future shocks. Measures can include increased agriculture and agriculture-related investment, policy advice, fast-track financing, support for safety nets, the multi-donor Global Agriculture and Food Security Programme, and risk management products.
Programmes and policies to help mitigate food price hikes include safety nets to ensure poor families can afford basic staples, sustained investments in agriculture, the introduction of drought-resistant crop varieties - which have provided large yield and production gains - and keeping international trade open to the export and import of food.
According to Food Price Watch, prices are expected to remain high and volatile in the long-run as a consequence of increasing supply uncertainties, higher demand from a growing population, and the low responsiveness of the food system.
The Food Ministry is looking to sell additional three million tonne wheat in the open market to bulk consumers such as flour millers, a move aimed at containing price rise and offloading surplus stocks.
"We are taking a proposal before the Cabinet Committee on Economic Affairs (CCEA) for releasing another three million tonnes of wheat to bulk consumers under the open market sale scheme (OMSS)," Food Minister K V Thomas told reporters.
In June, the government had allocated sale of three million tonnes of wheat from its godowns under the OMSS to ease storage pressure during monsoon season.
If this proposal is approved by the CCEA, the total quantity of wheat to be sold in the open market would reach six million tonnes in this fiscal.
Asked about status of 3 million tonnes of wheat sale approved in June, Thomas said, "We have already released 1.3 million tonnes of wheat under OMSS. Another one million tonnes of wheat will be sold next month and the remaining quantity will be released thereafter."
The ministry has decided to release a total of six million tonnes of wheat under the OMSS, though the Commission for Agriculture Costs and Prices (CACP) had suggested 10 million tonnes of the grain, he said.
As per latest data, the entire quantity allocated in the first tranche has been sold to bulk users by the Food Corporation of India (FCI).
Under the OMSS, FCI has sold wheat initially at a floor price of Rs 1,170 per quintal through the tender process. The base price was hiked to Rs 1,285 from early this month.
Meanwhile, wholesale prices of wheat have been rising due to short supply of the grain in the open market and fears that wheat crop in the rabi season may be down due to poor rains.
Wholesale prices in the national capital have risen by 22 per cent to Rs 1,625 per quintal in the last one month.
As on August 1, the government has total stock of 76 million tonnes of foodgrains, out of which wheat is 47.52 million tonnes. The storage capacity is 71.41 million tonnes.
The government's stocks have risen sharply due to record production and procurement in the last few years.
Much to the respite of millers and food manufacturers facing wheat crunch, the government is planning to release 60 lakh tonne wheat in the open market this financial year. The government's godowns are overflowing with grains due to a record carry-forward stock of 20 million tonne and further procurement of 38 million tonne.
"We will start with releasing 10 lakh tonne next month. Commission for Agricultural Costs and Prices ( CACP) has recommended offloading 10 million tonne wheat from the government's godowns this year," said a senior food ministry official.
The government had earlier decided to sell 3 million tonne of wheat in open market in this financial year.
The move is likely to ease the supply pressure. Spot wheat prices have risen by 15% over a week to Rs 1,700 a quintal in most of the markets. Traders are diverting stocks for export as the international prices have moved to $311-$325 a tonne on drought in US and Russia.
"Millers are to be blamed for the price rise. They refrain from purchasing wheat during the procurement season thinking they will get it cheaper after the government stops buying. Now traders and farmers are holding stocks creating scarcity which is jacking the prices," the official said.
He said that the government has so far released 13 lakh tonne of wheat in open market which is much more than the last year when the millers lifted only 12 lakh tonne out of the allocated 15 lakh tonne for the year.
"Allocations should not be based on the past year lifting. Last year the wheat was easily and freely available in the producing states as there was no export option available," said Naresh Ghai, president, Punjab Roller Flour Mills Association.
The millers are blaming the government for not releasing sufficient quantity in the market despite sitting on huge wheat stock. They say that high prices of wheat may spike prices of flour and other wheat products like bread, biscuits, maida etc.
"The government should immediately release wheat for cooling of the prices. We are getting wheat at higher prices due to shortage which will further push food inflation," Ghai said. Millers are also demanding to stop private traders from participating in the tender, which Food Corporation of India invites for selling wheat in the open market.
"Private traders corner maximum quantity quoting higher prices to ship the grain outside the country. We are being left high and dry," said Ram Chander Singhal, president, UP Roller Flour Millers Association. The food ministry however says that the participation of private traders have eased subsidy burden.
"Earlier the government used to sell wheat at Rs 1,170 per quintal as against the economy cost of Rs 1,900 a quintal. Now we are getting better realisation at Rs 1,685 per quintal through tendering," said a food ministry official.
Madhya Pradesh is all set to export close to 2 lakh MT tonne of wheat to Iran. The Food Corporation of India has twice tested the samples of wheat from the state at its laboratory in Karnal and has given the go-ahead.
The samples had been sent to Karnal after a delegation from Iran visited the state in mid-June.
In the first phase, 1.98 lakh MT wheat from Bhopal, Vidisha, Hoshangabad, Sehore, Gwalior, Ujjain and four other districts will be exported, while another 5 lakh MT will be dispatched later. A major chunk will be exported from Bhopal (72,000 MT) followed by Vidisha (38,000 MT) and Hoshangabad (35,000 MT).
The MP State Civil Supplies Corporation Limited asked the authorities in these 10 districts last week to properly maintain the wheat marked for export. “We will start loading the wheat once rakes are made available to us,” said corporation chairman Ramesh Sharma.
MD Chandrahas Dubey said wheat procured in the last season had been selected and the Karnal laboratory had cleared the samples.
Incidentally, wheat from MP was sent to Afghanistan last year as part of a goodwill gesture. Madhya Pradesh procured 8.5 million MT wheat in the last season.
Government-run State Trading Corp has floated a tender to export 200,000 tonnes of wheat in October or November from the government warehouses located in the western coast, a company statement said on Tuesday.
The last date of submission of bids is Sept. 4, it said.
The tender is part of the Indian government's programme to cut huge wheat stocks, taking advantage of current high global grain prices, through state-owned companies.
Three developments last week were a cause for worry for India’s agro trade. These were — apprehensions about the Indian Government’s restrictive actions on export policies in the wake of deficient monsoons; Russia’s August 8 meeting on whether wheat exports should be continued or restricted in view of the dwindling 2012-13 crop; and the USDA’s (US Department of Agriculture) report of August 10 on World’s Agriculture Supply and Demand Estimates (WASDE), with special reference to projections on US’s drought-hit corn crop.
Top Indian Government functionaries have ruled out meddling in the current trading environment, though stakeholders remain apprehensive. The Government needs to keep itself aloof from day-to-day market movements, unless there is a calamity.
There are two main crops in India — summer and winter— each with 50 per cent weightage. Both are exposed to the uncertainties of weather. There is always the possibility of one crop season offsetting the failure of the other. Besides, wheat and rice output in Punjab and Haryana is now supplemented by many other States. But lack of data reliability regarding supply, demand, stock, diversion and climate reduces chances of adopting the right course of government action. Besides, price discovery in Indian futures exchanges remains suspect. Free markets are the best bet in such situations.
Russia decided that despite the shortfall of 13 million tonnes of wheat in 2012-13 (56 million tonnes last year to 43 tonnes this year), exports for ensuring better prices to farmers will be maintained.
USDA’s August 10 report has estimated Russian shipments in the marketing year —July 2012-June 2013 — at around 8 million tonnes against 21 million tonnes last year, of which 3 million tonnes will be gone by August. Egypt bought 1,20,000 tonnes of Russian wheat on August 12 after five months at $317 f.o.b for September delivery. Offers of Russian wheat for October shipments are not available. Likewise, Ukraine and Kazakstan are also a showing drop in output and exports. Collectively, major producers of the “former Soviet Union” are down 33 per cent in output, with exports falling by 55 per cent.
Indian wheat values are at approximately $300 f.o.b and, therefore, competition from the Black Sea regions is now marginal. The Australian crop due in December is threatened by El-Nino. USDA expects an average upside in US wheat prices by another $50/tonne in 2012-13.
India’s overflowing grain inventories are therefore a reasonable replacement. South Korea contracted six cargoes totalling 325,000 tonnes of Indian wheat for October-November deliveries between $322 and $326/tonne (c&f) from Singapore traders, which included sales made by Indian private exporters and 190,000 tonnes by PEC/STC last week at f.o.b $296.68 and $302.50/tonne (against $228 fob of May bids, that were rejected). More Asian countries will turn to India for feed wheat, as the spread between Indian cereal and US corn is more than $60/tonne. Prospects of Iran accepting Indian wheat also appear brighter.
The world’s corn crop is down by 88 million tonnes (from 950 million tonnes in June to 862 million tonnes in July). US production, estimated at 376 million tonnes in June 2012, is now indicated at 274 million tonnes (102 millon tonnes less) with prospects of more decline (in yield), while 55 million tonnes have dwindled in July.
Chicago Board of Trade (CBOT) prices have risen from $203/tonne to $320/tonne in the last two months and US (Gulf) f.o.b is $342/tonne. World demand is reduced by 39 million tonnes; that includes 30 million tonnes in the US, as lower consumption in ethanol and feed is expected.
Surprisingly, CBOT stayed neutral after the USDA’s report of August 10. Either the trade has factored in USDA’s projections or the market is taking a position of pause before reacting in the near future.
At the same time, $2 per bushel or $80/tonne price surge in the US is anticipated — implying that the drought could get worse.
Rain is now progressing well in Karnataka, and Bihar is blessed with a rabi corn crop. Andhra Pradesh is well-positioned for kharif corn, and therefore any anxiety on the supply side is premature. Any increased demand-pull for export can be substituted by feed wheat.
Let the farmers and traders earn the best they can with better prices in the world market from October-November onwards.
Since June 2012, US soya output is down by 12 million tonnes from 87 to 75 million tonnes. Tightness on the supply side may continue. Historically, soyabean prices are 2.25-2.50 times US corn futures in CBOT. Soya is thus doubly bullish.
The current price of soyabean meal (SBM) is $770 f.o.b Kandla, while in December 2011 it was at $330 f.o.b. Soya producers in India will be truly blessed by goddess Lakshmi this Diwali, while crushers will have to position themselves with “go long mantra” in a rising export market in October-November 2012.
Against an MSP of Rs 2,240/quintal, beans are being traded at Rs 4,400/quintal now with a maximum down side of Rs 3600-4000/quintal in November (pressure of seasonal harvest). The “bull run”, subject to corn values being maintained, will continue — aided by higher imports from Iran under rupee payments.
Any interference by the Government to curb soya meal exports will make crushers vulnerable to insolvency due to the negative “crush margin”.
This may snowball into a crisis of scarcity of edible oil, compelling imports at rocketing prices, and disturbing the marketable earnings of farmers.
With the Centre gearing up to export wheat to other countries, as much as 50,000 tonne of wheat from Punjab has been sent to FCI godowns at ports in Gujarat for export, which may slightly ease state's storage crisis. Apart from this, 20,000 tonne of wheat will soon be sent to three ports at Mundra, Pipavav and Kandla in next 7-10 days by the Food Corporation of India (FCI). "We have already dispatched fresh wheat crop for 2012-13 year produced in Punjab to ports which is meant for exports only," a FCI official said here today. About 40,000 tonne of wheat stock has been sent to Mundra port and rest to Kandla port from where the wheat will be shipped, he said. FCI has its depot at Gandhidham in Kandla and it has hired a private depot at Mundra for storing the crop. "Now, we have also decided to send 20,000 tonne of another lot to these ports for export from Punjab," he said. The Cabinet Committee on Economic Affairs had last month allowed 2 million tonne of wheat exports from its godowns to ease storage problem. State-owned trading firms have received a total of 32 bids for their wheat export tenders for 2.4 lakh tonne so far. The Punjab government has been strongly demanding to evacuate food grain from the state through allowing export to other countries in the wake of overflowing warehouses. Punjab Chief Minister Parkash Singh Badal had even demanded that wheat should be exported from the states on the proportion on which grain stock was lying with the respective states. The Union Food Ministry had in the month of May sought samples of wheat crop from Punjab to ensure the crop, which may be exported, was free of 'Karnal bunt' disease. Wheat procurement from Punjab this year reached a record level of over 128 lakh tonne on the back of bumper output. However, about 30-35 lakh tonne of freshly harvested crop was stored in an unscientific manner as state still faces shortage of 40-45 lakh tonne of food grain against the present capacity of 100.6 lakh tonne of covered space and 105 lakh tonne of CAP. FCI has still 165 lakh tonne of wheat and 66 lakh tonne of rice in its godowns.
The Government’s (GoI) initiative to bring down burgeoning wheat stocks in the central pool through exports, is in its first stage of implementation.
Three tenders for the export of approximately 0.25 million tonnes of “milling wheat” opened last week (August 3) by public sector undertakings, PEC/STC/MMTC met with an excellent response.
There was expression of open interest of 1.27 million tonnes from international buyers, with quotes around $300/ tonne (f.o.b) Rs 16,800 for “2012-13 crop”, from the west coast of India. This price is on a par with Russian wheat.
Significant volume of open interest indicates foreign buyers’ keenness to trade Indian wheat. Hopefully, tenders will be awarded soon. Additional bidding is also notified for approximately 0.14 million tonnes of “milling wheat” of “2012-13 crop” from the east coast in the third week of August.
However, the “old crop” has not been offered for evacuation. There is a problem here: Two or three years later, the CAG or Parliament committees may comment adversely on why GoI exported “only” good milling wheat of the latest crop, and wonder why the old crop stocks of 2008-09-10-11-12 were held back, or extended for local distribution in PDS.
This old crop has greater chances of deteriorating vis-à-vis the newer lot. It would be a travesty of truth, if authorities were to claim that there was no decline in quality of the older cereals, stored unscientifically.
Estimates of old crops with central pool vary between 12-14 million tonnes.
After discovery of a favourable f.o.b price for the 2012-13 crop, policymakers should offer old wheat for export to realise optimum value, rather than depend upon outright disposal locally for feed, industrial usage and country liquor, at throwaway prices.
Feed I category can be easily sold at $250-260 f.o.b or around Rs 14500/tonne twice the reserve price (see table). Feed wheat (for livestock) commands a market share of 35-40 million tonnes, out of annual global shipments of 135-140 million tonnes, and is deemed to be a cheaper substitute, when corn or soymeal is expensive.
Russia/Ukraine export both good and average quality wheat, the latter being disposed of as feed wheat. Trade in various blends of Black Sea wheat is common. Australia offers its Australian Premium White Wheat (APW) for milling. ASW, or Australian Soft Wheat, the cheaper and average quality variety, can be consumed both for food and feed.
The Indian system lacks such quality-based identification. The alternative then, is to relate quality of grains to crop years.
The FCI’s guidelines are “first-in, first-out (old crop to be distributed first)”, modified for export evacuation to “last in, first out” (new crop to be exported first), so that Indian wheat remains globally credible and grains lying in open storage are moved out fast.
The world wheat market has seen a remarkable upside since the last two months. On May 24, the highest bid received in Indian global tender was $228/tonne f.o.b. Now at around $300/tonne (on August 3), there has been a 32 per cent surge. In 2001-06, maximum realisation for “milling wheat” varied between $102 and 180/tonne f.o.b and $80-90/tonne for about 4 million tonnes of “lustre loss” wheat of “average” specifications. Both were offered from the central pool.
Now ‘the trend is the friend’ indicating even higher wheat prices in October/November 2012, primarily triggered by hostile weather.
The factors at work are: Almost 33 per cent loss of corn production in US due to severe drought; bad news on Black Sea wheat; Russia considering options of export tax or outright ban on wheat exports; soybean quantity coming down in US/South America by 5-7 million tonnes; Australian wheat crop being threatened by 40 per cent or more due to emerging El-Niño; voracious demand of soybean and corn from China; Iran securing itself for food by additional grains procurement of 4-5 million tonnes; Egypt yet to commence its wheat import of 8-10 million tonnes after change of regime.
This is an opportune moment to offer Indian “old wheat” for export, as unprecedented hike in corn/soybean values will intensify replacement for feed wheat.
Central pool stocks of 2008-11 can be renamed as “Indian general purpose” or “IGP” wheat.
In addition to “milling wheat”, 50 per cent IGP wheat may also be offered for exports. Optimum value of IGP wheat can be assessed simultaneously as they should be lower by $20-25/tonne vis-à-vis milling wheat.
The preferred alternative would be to declare 2008-09-10-11-12 crop as “general purpose” for export at MSP/OMSS of Rs 12,850/tonne ($230) on port-delivered basis that will translate to an fob value of $250-260/tonne.
In 2001-06, Far Eastern buyers procured a large tonnage of Indian “lustre loss” or average quality wheat both for milling and feed. Mid-Eastern flour millers prefer milling wheat.
Shipments of new and old crops can be balanced concurrently. This would obviate any audit or political controversy.
An empowered committee has cleared export of 70,000 tonnes of wheat from the government stock, for which bids were invited by state-run trading firms STC and PEC.
Recently, the Cabinet Committee on Economic Affairs (CCEA) had approved export of 2 million tonnes of wheat from the Food Corporation of India ( FCI) to clear surplus stocks.
Last month, STC had floated global tenders for export of 1,00,000 tonnes, PEC for 90,000 tonnes and MMTC for 50,000 tonnes on the behalf of government.
"After looking into the price quotation of each agencies, the Committee has cleared export of 35,000 tonnes each for STC and PEC," a source said.
STC received highest bid of $ 302 a tonne by Germany's Toepfer International for 35,000 tonnes, while Singapore-based Starcomm had bid maximum at $ 296.65 per tonne for 35,000 tonnes, the source said.
The MMTC bids are likely to be scrapped as the company has received lower price quotation in the range of $ 265-280 a tonne, compared with STC and PEC, the source added.
The source further said STC and PEC would approach the highest bidders to ship more quantity at this price.
If Toepfer International and Starcomm would not agree to undertake more shipments, then STC and PEC would negotiate with second highest bidder on prices.
The bidders should undertake the shipments in August and September period.
The committee, headed by headed by Commerce Secretary, has been constituted following direction from the CCEA. The committee has been empowered to decide on quantity, timing of tenders and the price at which exports would be undertaken.
The CCEA had also fixed a base price of USD 228 per tonne for wheat exports.
Meanwhile, PEC, STC and MMTC have floated second global tender for export of 1,30,000 tonnes wheat from government godowns to clear surplus stock.
The government is facing a storage crisis because of record 80 million tonnes of foodgrains in its stocks against storing capacity of 64 million tonnes.
India produced a record 90.23 million tonnes of wheat in 2011-12 crop year (July-June), which led to an all-time high procurement of about 38 million tonnes this year.
A jump in global wheat prices on drought in the US and Europe may save the Indian government of embarrassment on its grain management. Forced to approve subsidy on wheat exports to ease storage, the government may now have to offer little or no dole-out against the estimated R1,263 crore on the grain’s shipment as global prices have surged by around 40% since mid-June, exceeding the usually more-expensive Indian wheat, according to official and trade sources.
Trade sources said at $295 a tonne, freight on board, the Indian wheat is much cheaper than comparable global varieties, which are ruling around $325 a tonne.
An Indian official said the government wasn’t in a hurry to offer subsidies on exports in view of the soaring global prices and if bid prices in the tenders remained lower-than-expected, it might take a fresh view of the subsidy plan. According to some other government officials, export subsidy isn’t necessary now.
The Cabinet Committee on Economic Affairs last month approved subsidy on wheat exports up to two million tonne from the official reserve and set the floor price of the grain for shipment at $228 a tonne.
State-run trading firms invited bids for the exports on two separate occasions and the bid prices will be known this month.
Food minister K V Thomas has said that the government would not sell the entire two million tonne at one go in view of rising global prices, and trading firms would float multiple tenders.
The government is facing a storage crisis as official stocks have swelled to more than 80 million tonne, compared with the storage capacity of 64 million tonne.
India, the second-largest wheat grower, produced a record 93.90 million tonne of wheat in the crop year through June, leading to an all-time high procurement of around 38 million tonne and an overflowing inventory.
Meanwhile, the worst drought in 56 years in Midwest farm belt in the US has driven up global wheat and corn prices, and a weak rupee has aided the cause of domestic exporters.
Moreover, Russia will have an exportable surplus of wheat in the range of 11 million to 15 million tonne in 2012-13 depending on the final 2012 crop which was damaged by drought, Reuters said quoting a government official there, which is less than 20 million tonne the country used to ship before it temporarily banned exports in 2010 following dry spells.
The only caution, however, is that if the drought-hit regions in the US drought get some showers, global prices may fall. Better chances of rains drove down wheat futures for September delivery on the Chicago Board Of Trade by 2.4% to $8.67-1/4 a bushel on Wednesday, adding to a 2.9% fall on Tuesday.
In Europe, benchmark November milling wheat futures, too, shed 1.5% at 256.50 euros.
However, since wheat crops in the vast regions across the US and Russia have been affected, no substantial fall in prices is anticipated at this moment,
and the current fall is triggered by more by profit-taking, analysts said.
The government has started releasing wheat from its own warehouses to quell the price rise in the domestic market.
Following price rises in the international market, Indian wheat is preferred. This has triggered more export from India in the past month. According to official sources, the Food Corporation of India has bought surplus wheat for exports from the major wheat producing states of Rajasthan, Punjab, Haryana and Uttar Pradesh. This is because Indian wheat is available in the global market at a competitive price, even after fetching a premium over the floor price of $228 per tonne, said sources.
In the international market, Australian wheat is available at $350 per tonne, while the Black sea or the Ukranian variety is fetching $300 per tonne. In contrast, the Indian government decided to export wheat at a minimum price (floor price ) of $230 per tonne, which is currently fetching $280-290 a tonne. The rupee depreciation has also helped the suppliers prefer exports over supply to the domestic market.
In the past month, wheat prices rose to Rs 1,350-1,500 a quintal, as against $1,170-1,250 a quintal in the domestic market. Official sources added export is not a worry since the government is laden with stocks in warehouses. “Moreover it is a rabi crop and won’t be much affected by the monsoon”, they said.
In June, an Empowered Group of Ministers had approved the open market sale of 8 million tonne (mt) of wheat, both for bulk sale and the public distribution system. The need to explore the opportunity to export wheat arose after grain stocks in state-run granaries bulged to 71 mt against the available storage space for 66 mt. The stocks are 150 per cent more than the required quantity, officials said.
In July, the Cabinet Committee on Economic Affairs approved export of 2 mt wheat from the government stock at a floor price of $228 (about Rs 12,400) a tonne. The last time the government had exported wheat from the Food Corporation of India’s reserves was in 2004-05.
While it has been decided to immediately allow export of 90,000 tonnes of wheat through bids received by a public trading firm in its recent tender, a committee headed by the commerce secretary has been set up for exporting the remaining quantity.
A wheat grass juice extract, that prevents iron deposits in body organs after transfusion, could soon be turned into a drug for thalassaemia patients. It promises to reduce the frequency of transfusions which are expensive and help to expand the lifespan of E-beta thalassaemia patients who don't survive more than 20 years. Animal trials for the drug will commence soon and the results could be out by September. Experts believe this could be a major step in thalassaemia treatment and prove to be a godsend for thousands of patients who survive on transfusion.
It was in 2006 that the scientists from NRS Medical College, Netaji Subhas Cancer Research Institute ( NSCRI) and National Research Institute for Ayurvedic Drug Development (NRIADD) got together to analyse the properties of wheat grass. After a study of the juice, they identified a compound that absorbed iron. It led the team to further examine the compound and they were pleasantly surprised by what was revealed.
"It is a chlorophyll-like thing that acts as a good chelating agent, absorbing iron and helping to discharge it from the body. We realized that it could work wonders for thalassaemia patients, who have to undergo regular transfusions. The iron deposit left by the transfusion damages the liver, lungs, spleen and heart. Medicines like Desferral and Desirox help to get rid of iron but they are very expensive. Also, this extract will be a more natural and effective way of getting rid of iron deposits," said Shubhra Mandal, assistant director, chemistry of NRIADD, who was a member of the research team.
Wheat grass juice is easily available and the compounds have no side-effects, the researchers claimed. "All you need is 8-10 day-old wheat plants. So, the drug will be cheaper and benefit thalassaemia patients, many of whom are forced to discontinue treatment due to the costs involved," said Monoj Kar, biochemist and researcher at NRS Medical College who played a key role in the research. A paper on the work was published in the European Journal of Medicinal Plants.
A clinical trial confirmed the finding three years ago when the research had commenced. The extract was tried on 10 pre-leukaemia patients, who were on transfusion and had very high ferritin (iron) levels. Consumption of the juice brought down their mean ferritin level from 3362 mg per decilitre to 842 mg per decilitre. "On an average, thalassaemia major patients would need less than two blood transfusions every six months when they are on this drug. This is a major improvement on any drug that is so far available," said Mandal.
Doctors hailed the research. It could turn out to be the biggest ever breakthrough in thalassaemia treatment, according to oncologist Gautam Mukhopadhyay. "Surviving on transfusions is a lifelong ordeal for thalassaemia patients. Other than taking a toll on the system, it's risky for there is always a shortage of blood. This should help the patients lead a healthier and longer life," said Mukhopadhyay.
Wheat is among the three most prominent cereals grown in the world. It has a special place in the Indian economy because of its significance in food security, trade, industry and agriculture.
The country has witnessed a substantial change in the past 4-5 decades, with the overall wheat production increasing at a compounded annual growth rate (CAGR) of 4.22% during 1960-2010. The share of wheat in the Indian foodgrain production is around 35.5%, and comprises about 22% of the total area under food grains.
Globally, wheat production has grown at a CAGR of 1.47% from 583 million tonnes in 2000-1 to over 694 million tonnes in 2011-12 mainly on account of a sharp rise in production in Russia, Australia, Kazakhstan and Ukraine.
Though China and India are the top two wheat producing countries, accounting for over 30% share in world production, the global wheat markets are mainly influenced by the changes in the demand-supply fundamentals of the top exporting countries like the US, Australia, Russia and Canada, which accounted for over 60% share in the world wheat export of 150 million tonnes in the 2011-12 season.
Meanwhile, the world wheat consumption has increased by 17% in the past decade and is 689 million tonnes in 2011-12. The top two producers are also the major consumers of wheat and, thus, have a very small presence in the world trade.
In India, wheat is grown as a rabi or winter crop, which is sown in October-December and harvested in March-May. The Indian wheat production has surged by around 34% in a decade and stands at 93.9 million tonnes in 2011-12.
The country has witnessed a sixth consecutive year of record high wheat production in 2011-12 on account of 11% rise in area under cultivation (29.50 million hectares in 2011-12) and 22% rise in yield (3,183 kg per hectare in 2011-12) in the past six years.
Wheat acreage has risen mainly on account of a substantial rise in the minimum support price (MSP), which has almost doubled in the past six years to Rs 1,285 per quintal. The domestic consumption of wheat stands at 82-84 million tonnes.
Indian state trading company PEC has issued an international tender to export 60,000 tonnes of milling wheat in September, the company said on Wednesday.
The wheat is stored at warehouses at Krishnapatnam port in Andhra Pradesh state and the bidding deadline is Aug. 16.
This is part of an Indian government programme to cut huge wheat stocks, taking advantage of current high global grain prices.
A United Nations aid agency recently purchased 61,000 tonnes of wheat of Indian origin to be shipped to the East African state of Djibouti, European traders said on Tuesday.
Seller was Cargill and shipment should be made by August 15. The purchase was made two weeks ago.
The U.N. has a range of food aid programmes underway in East Africa.
India is expecting a record grain crop year in the season ending June 30, 2012. On July 13, the Indian government issued a series of export tenders to reduce its huge wheat stocks.
The government today said it will go slow on export of 2 million tonnes of wheat from its godowns as there has been good response to recent schemes announced to offload additional grains to ease storage crisis.
Currently, the government is grappling with the problem of plenty as its godowns are full, with over 82 million tonnes of foodgrains against storing capacity of 64 million tonnes. "We are not in a hurry to export wheat. We will rather go slow (on exports) because there has been good response to our schemes," Food Minister K V Thomas told PTI.
He, however, made it clear that the government "will not abandon" the plan to export wheat from its godowns. Fearing damage of foodgrains during monsoon due to lack of storage facilities, the government had recently permitted 2 million tonnes of wheat export from the central pool. Besides, it allocated additional 5 million tonnes of foodgrains through ration shops and 3 million tonnes of wheat in the open market. Thomas said, "The response for wheat under the open market sale scheme (OMSS) has been good. Offtake of additional foodgrains from state government for PDS is also improving.
"If offtake improves, we will think about allocating additional quantities. So, we are not in a hurry to export. We will export only if we get good price," he noted.
Early this month, the government permitted export of two million tonnes of wheat from the central pool as a measure to clear surplus stock. It allowed wheat exports via state trade agencies STC, MMTC and PEC with floor price USD 228 a tonne.
The country has shipped 1.8 million tonnes of wheat through private trade since the government lifted the export ban on the commodity in September 2011.
India, the world's second biggest wheat producer, is facing storage crisis due to bumper procurement and production in the last few years. The country had harvested a record 90.75 million tonnes in the 2011-12 crop year (July-June).
The ministry of external affairs ( MEA) is exploring opportunities for exporting 10 million tonne wheat on bilateral basis.
"Twelve countries including Japan, Indonesia, Iraq, Nigeria and the Netherlands have shown interest in buying wheat from us. Diplomatic representatives of these countries have enquired about the quality, export mechanism and phyto sanitary of the food grain," said a food ministry official on anonymity.
The overflowing granaries have allayed all concerns over the grain availability even if monsoon is deficient this season. "We are in a comfortable position as far as food grain stocks are concerned. There is no threat to export even if rains are deficient," said Union Agriculture Minister Sharad Pawar. Iraq needs 1 million tonne wheat, Indonesia 5.2 million tonne and Vietnam requires 1.5 million tonne to meet their domestic demand.
The food ministry is in talks with Iran for exporting up to 3 mt. The sanction-struck gulf country had stopped importing Indian wheat since 1996 over complaints of Karnal Bunt, a fungal disease.
An Iranian delegation visited India last month for checking phyto sanitary measures and quality of wheat. "Out of 100 samples collected, only 56 had Karnal Bunt. We are hopeful of import orders from Iran," another official said.
With a record wheat production followed by an unprecedented procurement of 82 million tonne, the government is now ready to enter the export market in a big way. It had allowed 2 million tonne wheat export from FCI godowns earlier this month to cut down the stocks.
"We have never promoted food grains exports till now in view of food security. But now, we can contribute to global food security. India will be a consistent player in the market," the official said. Due to consecutive bumper production, the grain stocks have exceeded domestic requirement prompting the government to lift grain exports ban in September 2011.
The Middle East has bought around 200 KMT of new-crop Indian wheat and more deals are likely, as a rally in global prices and the weakening currency of the South Asian nation make exports competitive.
Indian wheat is quoted at around $255 a tonne free on board (FOB), compared with $295 a tonne being offered for Australian wheat. In the Middle East, Indian wheat is being offered at around $280 a tonne, including cost and freight (C&F), while rival Black Sea cargoes are being quoted at close to $315 a tonne.
The International Grains Council (IGC) has further trimmed its global wheat production forecast for 2012-13 to 665 million tonnes (MT) due to unfavourable conditions in some countries including Russia.
In May, the London-based organisation had pegged the global wheat output at 671 MT for 2012-13. The revised forecast is lower than 695 MT output 2011-12.
"The wheat production forecast is reduced by six million tonnes from last month to 665 MT, down by 4 per cent from the 2011-12 record," IGC has said in its latest Grains Report.
The outlook for world wheat production in 2012-13 continued to be affected by unfavourable conditions in some countries, including a further deterioration in crop expectations in Russia, it noted.
However, the US wheat harvest was generally better than expected, while recent rains helped crops in parts of Europe to show some recovery from the less-than-ideal conditions earlier in the season, it added.
Similarly, world wheat consumption may fall to 682 MT, from 689 MT in 2011-12, the IGC said.
China, with more than 100-MT output, is the world's largest wheat producer. India is the world's second-biggest producer and is estimated to have harvested 90.23 MT in 2011-12, as per the government data.
According to the IGC report, global trade in wheat is expected to be lower at 134.6 MT in 2012-13, against 143.5 MT in the year-ago, as milling wheat imports, particularly in North Africa, are nearly balanced by an increase in projected feed wheat trade.
Smaller export surpluses in the Black Sea region will see demand switch to other regions in the year ahead, especially the US, it added.
Wheat futures are likely to hit new contract high this week on expected rise in shipments, following a surge in global prices of the commodity.
The US benchmark wheat futures on Chicago Board Of Trade( CBOT) rose about 3 per cent on Monday, following the lead of corn, which has soared after sweltering weather across the US Midwest threatened yields.
"India has surplus wheat and was struggling to export as prices in the overseas markets were not attractive. Now prices have risen globally, and India could trim its bulging stocks by selling in the global market," said Faiyaz Hudani, analyst with Kotak Commodity Services.
On Monday, the key August contract on the National Commodity and Derivatives Exchange (NCDEX) closed up 2.1 per cent at 1,307 rupees per 100 kg.
Faiyaz expects the contract to touch a new high of 1,370 rupees per 100 kg this week.
Agribusiness giant Cargill Inc has sold about 32,000 tonnes of Indian wheat to Indonesia in the first large shipment of the grain to Asia in at least seven years.
India lifted a ban on wheat exports in September but shipments from the South Asian nation have picked up in recent weeks as a rally in global prices and a weaker currency made Indian wheat competitive in the world market, traders said.
India, the world's second-biggest wheat producer, is struggling to trim bulging stockpile that have filled up its storage facilities after the bumper harvests of recent years.
Grain stocks in Indian government warehouses stood at a record 82.4 million tonnes on June 1 although there was storage space only for 63 million tonnes, forcing authorities to store the surplus in the open.
The government has decided to issue fresh tenders for the entire two million tonnes of wheat it wishes to sell from its stock, as global prices have risen in recent weeks. A senior official said the Cabinet Committee on Economic Affairs decided last week to cancel the earlier tender for 90,000 tonnes and issue one for the entire quantity. “Not all the wheat will be sold in one go,” the official said, explaining that 10-15 tenders would be issued over the next year for the export. The measure, aimed at reducing the stock, was taken to clear space for fresh inflows, given the storage problem. Such a measure is being taken after almost six years. State Trading Corporation (STC) had floated the earlier tender to export 90,000 tonnes, ostensibly to explore the price the government could get in the international markets. The highest price quoted was $228 per tonne. Since then, global prices have risen, on reports of damage to standing crop in some major exporting nations. The official said Indian wheat would now fetch around $260 (Rs 14,300) per tonne. “The base price has been kept flexible and every tender will have a separate base price, but no quotations below $228 per tonne will be accepted by the government,” the official said. A low reserve price will help clear older stock. He said a committee headed by the commerce secretary and comprising officials from STC and other trading arms of the government would evaluate all the tenders. The export move has not found favour with domestic flour millers and traders. Our Chandigarh correspondent says traders have alleged the decision to allow exports could lead to manipulation in prices. They also want the government to focus more on export of value-added products. Says D P Singh, president All India Grain Exporters Association: “Ideally, the government should not have spelt its intent to export wheat beforehand, since it leads to speculation in prices. No country in the world does it.” According to Ramesh Saraf, president of the Roller Flour Millers Association of Gujarat, “Wheat suppliers (farmers and big traders in this case) have increased prices by Rs 60-70 per quintal in the last few days." A bumper harvest has ensured state granaries are overflowing, with a record 82 mt of foodgrain, against storage capacity of only 64 mt. India, the world's second largest producer of wheat, had harvested a record 90.2 mt in the 2011-12 crop year (July-June), leading to a record procurement of nearly 38 mt so far this year.
Wheat prices have firmed up on futures and spot markets after export prospects have improved. Prices have rallied globally with hot weather scorching American grain belts. The International Grains Council has slashed its estimate for world grain stocks at the close of 2012-13 to a five-year low, citing reduced expectations for wheat production. "Prospects of exports have improved owing to above-average temperatures in most of the major maize growing regions of the US. Till date, 1.4 million tonne wheat has been exported and another 0.5 million tonne will be done by private traders," said an official of a multinational company. Indian traders were quoting milling wheat at $250 to $255 per tonne freight on board (FOB). The old stock, to be sold as animal feed, was being quoted at $230 to $235 a tonne FOB. The Black Sea countries were quoting wheat at $280 per tonne FOB. "The Indian government and exporters should take advantage of this rally," said Anil Monga, MD of Emmsons International. The company has exported 0.5 million tonne wheat since September 7, 2011. "The government should extend the Open Market Sales Scheme to exporters which will further boost exports," he said. To ease the storage crisis, the government will sell 1.3 million tonne of wheat to bulk consumers like flour millers at subsidised rates at Rs 1,170 per quintal. As of July 1, a record 50 million tonne of wheat was stocked in public godowns against the buffer norm of 20 million tonne. The stocks have risen due to a record production and procurement in the last few years. Wheat production was a record 252.56 million tonne in 2011-12, up from 241.56 mt in the previous year. Wheat for September delivery on the National Commodity and Derivatives Exchange (NCDEX) was 0.16% higher at 1,249 per quintal. In Delhi spot market, prices were steady at 1,220 per quintal.
"Exporters such as Glencore, Louis Dreyfus and Emmsons are making purchases from Madhya Pradesh, Rajasthan and Uttar Pradesh," said a grain trader in Delhi's Naya Bazaar market.
Ending differences between agriculture minister Sharad Pawar and food minister KV Thomas, the cabinet committee on economic affairs (CCEA) headed by prime minister Manmohan Singh did a balancing act, by lifting a four-year-long ban on export of wheat as well as releasing 8 million tonnes in the domestic market. The CCEA approved export of 2 million tonnes of wheat from the central stock. The two ministers were at loggerheads on the issue. While Pawar advocated export of wheat to clear overflowing godowns, Thomas proposed to sell 30 lakh tonnes of old stock at a concessional rate to private flour mills and provide additional supply to both APL and BPL families. The issue of storage had become so acute that the Uttar Pradesh government decided to stop wheat procurement last month. Briefing about cabinet decisions, home minister P Chidambaram said the proposal was one of the steps to manage overflowing wheat stocks in the central pool. As a measure to soothe the nerves of food minister, the government also agreed to release additional 5 million tonnes of food grains to BPL families and allowed sale under Open Market Sale Scheme of 3 million tonnes of wheat. The government’s decision of permitting wheat export may also raise hackles in the United States as the price set for exports (12,400 per ton) is even below this year’s minimum support price (MSP) of Rs 12,850 per tonne. It means subsidising the foreign consumers to the tune of Rs800 crore. The US had been warning that selling wheat below cost will be in violation of the World Trade Organisation rules. Since India’s export was already in the pipeline, the US had warned the commerce ministry that it cannot sell below the MSP at which it buys from the farmers. The US may move WTO against India. The actual price of wheat was coming to the tune of Rs 16,500 per tonne. But the cabinet note prepared for the CCEA, pointed out that there would be no buyer at this price, defeating the very purpose of offloading the extra stock from the central pool.
Around 17 countries, including Japan, the Netherlands and Iraq, have evinced interest in importing wheat from India, the world's second biggest producer, a top government official said today. At present, the government is grappling with the problem of plenty due to record production in recent years. Its godowns are overflowing with a record 82 million tonnes of rice and wheat, against the storing capacity of only 64 million tonnes. The government is mulling export of 2 million tonnes of wheat from its stockpiles. Representatives of various countries today had a meeting with the officials of External Affairs Ministry, the official told PTI. "It was a preliminary meeting. The representatives of countries enquired about the quality of wheat and modalities of shipment among other issues," the official said. The government had lifted ban on wheat exports in September 2011 but the shipments have not been picked up so far. Over one million tonnes of wheat have been shipped through private trade since September 2011. The country is facing storage crisis and wants to clear wheat stock, especially that of 6.6 million tonnes lying open in unscientific way before monsoon picks up in the coming weeks. India is also in talks with sanction-hit Iran for export of wheat and is resolving the quality issues. Experts said that India is in a better position to export as the CIF (Cost, Insurance and Freight) of wheat grown in Australia and the US is close to $315 per tonne. The country's godowns are full with rice and wheat stocks due to record procurement and production in the last few years. Wheat production is estimated to be bumper 90.75 million tonnes in 2011-12 crop year (July-June).
The wheat procurement drive by the Food Corporation of India (FCI) and other state government units for the 2012-13 season has gathered momentum in the last two weeks. The procurement of the staple crop in the key growing states of Haryana and Madhya Pradesh has increased in comparison to last year. However, it has slowed down in Punjab because of adverse weather conditions.
Till Thursday, more than 5.5 million tonne (mt) of wheat had been purchased from farmers in Madhya Pradesh, Haryana and Punjab, while the purchase during the same period last year stood only at 4.6 mt.
During 2012-13, the government has set a record procurement target of close to 32 mt in expectation of a bumper wheat crop. Last year, the FCI, along with various state procurement agencies, procured 28.33 mt of wheat.
Madhya Pradesh, where procurement drive initiated by the state civil supplies department commenced a month back, has already crossed the 2-mt mark, against the only 1.4 mt reported last year.
In anticipation of a bumper output, the MP government is aiming to purchase 6.5 mt of wheat during the current rabi marketing season. It had bought 5 mt in the last fiscal.
In Haryana, the agencies have purchased more than 2 mt of wheat from farmers. However, the drive has been sluggish in Punjab, the biggest producer of wheat, where procurement commenced on April 1. The state agencies have purchased around 4 lakh tonne of wheat against the 9 lakh reported in the same period last year.
Meanwhile, the MP government is taking up the procurement of wheat aggressively by offering R100 a quintal, a bonus besides the minimum support price (MSP) announced by the Centre.
In a bid to boost production, the government hiked the MSP for wheat to R1,285 per quintal against last year’s R1,120.
In 2010-11 crop year, when the country saw a record 85.93 mt of wheat production, 28.33 mt was procured from farmers. Agriculture minister Sharad Pawar had recently predicted a record wheat output in excess of 88 mt during 2012-13.
After a recent meeting of state food ministers, Punjab set a wheat-procurement target of 10.8 mt, while Haryana and MP expected to buy 7 mt and 6.5 mt, respectively.
The FCI has more than 30 mt of wheat apart from what is required under the Targeted Public Distribution System.