| NEW DELHI, March 5
NEW DELHI, March 5 India could soon allow an
extra 5 million tonnes of wheat exports - more than doubling
volumes this year - two government sources said on Tuesday, as
the world's second-biggest wheat producer tries to cut massive
The move would mean India was exporting a third of the
quantities of the United States, the No. 1 exporter, and would
almost certainly drag down further global prices that have
already hit an eight-month low.
The government has already given permission for 4.5 million
tonnes of wheat exports in 2012 so the additional 5 million
tonnes would take the total to 9.5 million tonnes.
"The cabinet is expected to allow 5 million tonnes of wheat
exports either this week or next week," one source, who is
directly involved in the decision making process, said.
Consultations with other ministries on the food ministry's
proposal for the extra exports are almost over and now only the
cabinet has to approve it, the second source said.
With only 47 million tonnes of total grains storage space
and Feb. 1 grains inventory totalling 66 million tonnes, some
government stocks of wheat and rice are lying under tarpaulin
sheets in open fields, exposed to rot and decay.
The government wants to cut down the stocks exposed to the
weather before the advent of monsoon rains in June.
Government-backed companies have already sold 3 million tonnes
of the 4.5 million tonnes of wheat exports allowed last year.
The government is currently exporting wheat at about $300 a
tonne free on board (FOB). India is primarily selling wheat to
Africa and the Middle East.
"Going forward, international prices will only fall and it
makes sense for the government to ship out as much as possible,"
said Tejinder Narang, adviser at New Delhi-based trading company
By June or July, India would be forced to sell at $260 a
tonne FOB as Black Sea harvests will drag down global prices,
"India needs to grab the golden opportunity before global
wheat prices bottom out once supplies from the Black Sea origin
hit the market," said Veena Sharma, secretary at the Roller
Flour Millers Federation of India, an industry body.
Benchmark U.S. wheat prices are trading near their
lowest since June as supply prospects have been boosted because
melting snow across the U.S. Plains has provided soil moisture
to the drought-stricken winter crop.
A forecast of higher production in Australia is also
weighing on global wheat prices.
India lifted a four-year-old ban on wheat exports in
September 2011 by allowing private traders to ship out the
grain, followed by orders for exports from government stocks.
The government, which had to ban exports in 2007 to keep a
lid on domestic prices and bolster local supplies, regulates
exports of grains to ensure ample supplies for its 1.2 billion
New Delhi buys grains from local farmers at fixed prices to
protect them from any distress sale and build stockpiles to sell
subsidised food to the poor.
(Editing by Jo Winterbottom and Anthony Barker)