India misses the bus with wheat export decision
India’s plan to sell wheat after a four-year ban will find few takers as resumption of Russian exports is likely to flood the market with cheaper grain, already a nightmare for top suppliers like the United States and Australia.
India’s timing is unfortunate; coming just as Russia- typically the world’s third largest exporter - this month started selling cargoes following a year of drought.
Analysts said that would make it almost impossible for Indian wheat to find a home, particularly as the Indian wheat will cost around $300 per ton against the roughly $244 cost of its Black Sea competitor.
“India has missed the bus as we are not competitive now,” said Amit Takkar, president of Emmsons International, a commodities trading company based in New Delhi. “At current rates, wheat exports will not be viable without a subsidy and a subsidy is unlikely, so it is out of the question.”
Pakistan moved nimbly earlier this year to take advantage of a global supply squeeze resulting from Russia’s absence from the market.
Asia’s third-largest wheat producer, Pakistan resumed wheat exports in January for the first time in three years and sold nearly 1.8 million tons of wheat by June, before being knocked out of the wheat market by fierce competition from Russia.
“The timing of Pakistan’s move was beneficial for them,” said Darren Cooper, a senior economist at the International Grains Council in London.
Published in The Express Tribune, July 14th, 2011.
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