* India could cut floor price for wheat exports by $40/T
* Indian wheat loses out to rival Black Sea supplies
* Lower floor price will help boost sales, trim stocks
By Mayank Bhardwaj
NEW DELHI, Oct 15 India may soon cut the floor
price for exports of wheat from government warehouses by 13
percent, government sources said on Tuesday, which could boost
shipments and put downward pressure on benchmark prices in
The move could come after state-run trading firms in the
world's second-biggest wheat producer after China earlier this
month received bids lower than the minimum rate for overseas
sales, the sources said.
Government warehouses are awash with wheat, with stocks at
36.1 million tonnes as of Oct. 1, substantially higher than a
target of 11 million tonnes. The government also has an extra 3
million tonnes of wheat as strategic reserves.
The cabinet in August allowed three government-backed
trading companies to export 2 million tonnes of wheat from
warehouses at a floor price of $300 per tonne plus taxes.
But in the first round of export tenders, the State Trading
Corp., MMTC Ltd and unlisted PEC Ltd
received bids lower than $300 a tonne.
That poor response has prompted the government to consider
cutting the price.
"We could soon lower the price as we do not want to be seen
as too rigid, but at the same time let me tell you that there is
a good deal of demand for Indian wheat," a government official
involved in the decision-making process said.
The government could lower the price to $260 a tonne, said
another government source who is also part of the process.
Traders do not find the price of $300 a tonne viable.
"It is the need of the hour to reduce the price of $300 a
tonne, because it is neither workable nor competitive," said
Tejinder Narang, an adviser at New Delhi-based trading company
India primarily exports wheat with 11 percent protein
content. For buyers in the Middle East, Indian wheat costs $325
a tonne C&F, while the same variety from the Black Sea region is
available at $275-$280 a tonne C&F, traders said.
The cabinet earlier in the year had approved exports of
nearly 4.5 million tonnes.
Its export volumes are paltry in a global trade of nearly
140 million tonnes, but, as global supplies tighten, they will
help meet the needs of the biggest buyers of lower-quality wheat
in the Middle East and Africa.
India buys rice and wheat from local farmers to supply
subsidised food to the poor. The government has recently
expanded its food welfare programme to feed 70 percent of the
1.2 billion population.
(Editing by Jo Winterbottom and Jane Baird)