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Agriculture

November 29, 2012

INTERNATIONAL: Wheat exports from India to surge as drought cuts global harvest

SINGAPORE — India, the world's largest wheat producer after China, is set to boost exports to Asia, displacing shipments from the United States and Australia, said MMTC Ltd.

Shipments may be 5 million metric tons this year as buyers seek alternative supplies amid lower harvests in the U.S., Australia and Ukraine, said Asheesh Majumdar, chief general manager at MMTC, India's largest state-owned trader. Exports were 891,000 tons in 2011-2012, U.S. government data show.

Wheat, used to make bread and pasta, and fed to chickens and cattle, jumped 33 percent this year, as dry weather hurt crops from Australia and Russia to the U.S., cutting global production to the smallest in five years. The rally has boosted demand for Indian wheat, Majumdar said.

"We will remain a significant player, at least in Asia Pacific," Majumdar said at a conference in Singapore on Tuesday. "If there are too many players coming, if the U.S. and Australia are in proper shape, maybe we will not command that much premium." Export prices in India are at least $10 a ton more expensive than rates in Chicago, he said.

Prices reached $9.4725 a bushel in July, the highest since April 2008.

India's state reserves of wheat surged to 40.6 million tons as of Nov. 1, from 29.7 million tons a year earlier, the Food Corp. of India said on its website on Nov. 6. The government is considering allowing additional exports to clear the stockpiles and make room for new harvest, an official at the food and consumer affairs ministry said in New Delhi yesterday.

State traders including MMTC, STC Ltd. and PEC Ltd. have already contracted to export 1.3 million tons of wheat out of an export quota of 2 million tons, according to the government. The companies may be allowed to export 1.5 million tons more, the food ministry official said.

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