Pakistan gains on India's wheat, rice export ban
Pakistan has filled a crucial gap in Asian and African markets for wheat and rice due to lack of supply from the Black Sea region and India. Even though India is sitting on a huge inventory of grains, it is missing out an opportunity to make its presence felt in global trade because of a ban on exports of wheat and non-Basmati rice, they said, according to Dow Jones.
"Rather than maintain a blanket ban on exports, India needs to impose a quantitative ceiling on shipments," said a Vietnam-based executive with a global grains trading company. A ceiling would enable India to reduce its excess inventories without risking food security, and would also help to check increases in international prices at a time when food inflation has become a global concern, he said.
As of April 1, India's government was holding stocks of almost 29 million tons of rice and 15.4 million tons of wheat, well above buffer and strategic reserve requirements of 14.2 million tons of rice and seven million tons of wheat.
Pakistan has exported its excess stocks of wheat and India should do likewise, said Muhammed Najib Balagamwalla, chairman of Seatrade Group, a Karachi-based commodities trading company.
Pakistan has exported 1.2 million tons of its earlier inventories, shipments of another 200,000 tons from old stocks are in the pipeline, and it is now striking deals for the current harvest, he said.
Indian traders say the country's domestic wheat prices in many states are well below government-set intervention price, and quite competitive in the international market. Wheat in northern Uttar Pradesh province recently traded around INR10,200 per ton, inclusive of taxes, compared with government-set intervention price of INR11,200 per ton.
Ashok Gulati, chairman of India's Commission for Agricultural Costs & Prices says the country should immediately allow exports of up to 10 million tons of wheat and rice, as it would help to improve prices paid to farmers. Even after accounting for transportation expenses from Uttar Pradesh to port and other miscellaneous expenses, India can offer wheat for export at $275 per ton, free-on-board, making it cheapest exported wheat in the world.
Pakistan is exporting milling wheat around $300-$310 per ton FOB, while milling wheat grades of Australia and the US are well above $350 per ton, FOB.
In rice markets, many African buyers that have been importing Indian grain have turned to Pakistan and Thailand in past few years. Despite devastating floods last year, Pakistan exported almost two million tons of non-Basmati rice during July-March period.
India can export parboiled rice for around $400 per ton FOB, while Pakistan's latest offers are close to $470 per ton FOB, and Thai quotes are around $500 per ton FOB, a New Delhi-based trading executive said. India can also offer 25% broken white rice around $440 per ton, while corresponding grade is around $450 per ton from Vietnam & $440 per ton from Pakistan. All prices are free-on-board.
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