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PREVIEW-Wheat trade eyes India's diplomatic wheat deals

* What: International seminar on wheat and wheat products

* When: Feb 19-20 at Ahmedabad, India.

* Wheat trade eyes steady exports from India.

* here

By Mayank Bhardwaj

NEW DELHI, Feb 18 (Reuters) - India’s wheat trade is keenly watching government moves that may allow selected exports to resume as the the world’s second-biggest producer of the staple runs out of storage space ahead of an expected record harvest.

The government has recently allowed the sale of a limited amount of wheat to Nepal, but an export ban imposed three years ago after a poor harvest continues as rising food prices have sparked widespread protests in India.

Managing the surplus grain on the eve of another expected record harvest after three years or surplus output and export curbs will be high on the agenda at an international conference at the city of Ahmedabad in western India on Friday.

“Because of high wheat stocks, India is in a position to help its partners. We’ll be watching out for the scope for more government-to-government deals,” a top executive at an international trading firm said.

India’s wheat stocks were at 20.6 million tonnes on Feb. 1, up 22.6 percent from a year ago, making a compelling case for exports, but industry officials said diplomatic deals were more likely than open-market sales.

This is because domestic prices are higher than global levels and the country’s output of high-protein wheat, for which there is international demand, is barely enough for local consumption.

Exports of regular grades are viable only if subsidised.

Last week, traders said Indian wheat cost around $345 a tonne, including cost and freight, to Southeast Asia, compared with $230 for Black Sea wheat and $260 a tonne for Australian wheat.

HIGH-PROTEIN WHEAT

“High-protein wheat would have helped us export even in a bearish market,” said M.K. Duttaraj, former president of the Roller Flour Millers’ Federation of India.

Traders and flour millers said they would also debate ways to improve storage, shipping and use of high-protein grain in the wheat crop to help India become a steady exporter of wheat.

Traders and millers say India’s continued focus on conventional wheat also leads to imports when crops fall short and a failure to build market share with potential customers.

For a table on India’s wheat imports since 2001, see [ID:nSGE6190DH]

“When I began my career in the early 70s, Australia used to produce only soft, low-protein wheat. Now, Australia is a leading, long-term and dependable exporter of a very good variety of high-protein wheat,” said Duttaraj.

He said southeast Asia and the Middle East could be permanent buyers of high-protein Indian wheat.

Duttaraj said participants would also discuss the ways to ensure the grain earmarked for subsidised sale to the poor reaches the beneficiary.

The government needs about 13 million tonnes of wheat annually for subsidised sale. Studies show only around 40 percent reach the poor.

“The idea of distribution of food coupons to the poor who in tern can buy grains at cheaper rates from shops across the board will be discussed threadbare,” said a flour miller from the southern city of Bangalore, who did not wish to be identified.

For a FACTBOX on Indian wheat, see [ID:nSGE61E06B]

For a TIMELINE of key development in the sector, see [ID:nSGE61G0DH] (Editing by Ed Lane)

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