Falling international prices and the strengthening of the Indian rupee against the Dollar is making Indian wheat price unviable in the international market. The bigger harvest of the commodity in 2015 may also go as a challenge for the Food Corporation of India in allocating storages and the government could only manage by increasing exports.
By Sai Nikesh D
India’s wheat exports are expected to decline in 2015 and the country is focused at bumper harvest of the wheat crop this year to taken on competition from countries like Australia, Russia and Europe.
In India, the trading companies usually sign contracts with the government during February-March for the upcoming crop, but the case is different this time.
According to industry experts, the trading companies are not signing contracts for the upcoming crop to be harvested in April-May, citing the Indian wheat prices of $275 a ton, as too high.
Rajnikant Rai, COO of ITC’s agri-business, was quoted to have told sources that, in 2015, commitments for a new crop for shipments from March till May has been nil.
While the price of US wheat variety is at $232 a ton, the price of French wheat is at $210 a ton and that of Australia’s wheat is at $270 a ton, which are cheaper than that of India’s wheat price.
According to a statement by grain analyst, French wheat has got good demand in the season. Due to decline in euro currency, the price of French wheat came down to $210 per ton from $245 a ton.
Falling international prices and the strengthening of the Indian rupee against the Dollar is making Indian wheat price unviable in the international market.
According to the reports, as of January 1, 2015, the central pool wheat stocks stood at 25.11 million tons which is more than twice the buffer and strategic reserve norm of 11.2 million tons.
India’s total wheat production in 2014 stood at 95.45 million tons, which is three times more than the target stock and is expected to be much more in 2015.
The bigger harvest of the commodity in 2015 may also go as a challenge for the Food Corporation of India in allocating storages and the government could only manage by increasing exports.
But, in the wake of global markets giving heavy competition with their increased supplies and lesser prices, the Government of India will have to face a real challenge in 2015.
At this juncture, the only solution left with India to regain its top position in wheat exports is to subsidize the exports, along with the increasing procurement.
This article was published in The Dollar Business on February 4, 2015.