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India aims for new markets as world wheat supply falls

Hari Ramachandran in New Delhi

India, anxious to cut bulging grain stocks, expects to find new markets for its wheat with a firming in global prices and squeeze in world supplies, traders said on Thursday.

They said wheat exports should grow in the coming months with fresh demand emerging in South East Asia and the Middle East because of attractive prices.

"The demand for Indian wheat is surging mainly because of its attractive prices and a decline in output in main exporting countries like Australia and the United States," said Premadas Nair, senior vice president of Vishal Exports Overseas Ltd.

Traders said India was also exploring the chances of resuming wheat exports to Iraq, which had rejected some consignments on quality grounds last year, leading to suspension of exports.

"Worldwide there is a shortage of wheat and India is one of the few markets with a surplus," said Gagan Gulati of GTC Holdings, a grains exporter.

India should be exporting 750,000 tonnes of wheat in the next three months" he said.

Indian wheat is mainly sold to Philippines, Vietnam, Indonesia, South Korea, Africa and the Middle East.

An official of a state-run firm said on Thursday the company had signed contracts to export 150,000 tonnes of wheat to Southeast Asia and the Far East.

He said the wheat, for which contracts were signed with a trading house at $108 per tonne on a free-on-board basis, was for delivery in January, February and March. The official did not specify the quality of the wheat sold.

India has been selling around 200,000 tonnes of wheat a month. It plans to export 15 million tonnes of grains, including rice, in 2002-03 (April-March) to cut its huge stock of 55.4 million tonnes as of September 1.

Surging demand

But logistics posed problems for Indian exports, Nair of Vishal Exports Overseas Ltd added.

"There are not enough rail rakes to move the wheat to ports. Bulk vessels are forced to wait for four to five days at ports in Vishkapatnam, Kandla and Mundra for loading," he said.

December wheat futures at Chicago Board of Trade were quoted at about $3.96 per bushel on Wednesday, up from around $3.63 about 10 days ago.

Traders said neighbouring Bangladesh was also emerging as a leading buyer of Indian wheat.

Traders expect Iraq to resume buying from India after a lower wheat crop in Australia, from where it mainly sources wheat.

Several Indian firms won contracts last year to supply 350,000 tonnes of wheat to Iraq under the UN oil-for-food programme at $203 a tonne cost and freight.

But Iraq rejected the Indian cargoes in May 2001 saying the grain did not meet quality standards. Later India set up cleaning facilities at various ports to get rid of impurities in grains.

A Delhi-based firm said it was set to resume wheat exports to Iraq with a shipment of 20,000 tonnes early next month.

Several other traders said they would watch how Iraq responds to the Indian shipment before deciding to execute other orders.

India has exported about 3.2 million tonnes of wheat since January this year, compared with nearly 3.5 million in the whole of calendar 2001, traders said.

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