The Middle East has bought around 200,000 tonnes of new-crop Indian wheat and more deals are likely, as a rally in global prices and the weakening currency of the South Asian nation make exports competitive, grains traders said on Tuesday.
US wheat futures was little changed at around nine-month highs on Tuesday, after climbing more than 7 percent in the last session, tracking gains in corn and on expectations of lower production from the Black Sea region. In the cash market, Indian wheat is quoted at around $255 a tonne free on board (FOB), compared with $295 a tonne being offered for Australian wheat.
In the Middle East, Indian wheat is being offered at around $280 a tonne, including cost and freight (C&F), while rival Black Sea cargoes are being quoted at close to $315 a tonne. Aiding Indian wheat exports is the embattled rupee, which has hit a succession of record lows this year. It has fallen about 7 percent year-to-date, making it the worst performing currency monitored daily in Asia by Reuters.
India, the world's second-biggest rice and wheat producer, is grappling with storage problems due to bumper harvests in recent years. Grain stocks at government warehouses were at a record 82.4 million tonnes on June 1 against 63.0 million tonnes of storage space, forcing authorities to store grains in the open. Officials concede that 6 million tonnes of grains could rot due to lack of storage space, but analysts say the losses could be higher as more than 19 million tonnes lie in the open. India, which is sitting on a burdensome stockpile of wheat, has been trying to sell grains, including to sanctions-hit Iran. India could export up to 3 million tonnes of wheat to Iran if supplies are requested, Food Minister K.V. Thomas said, as India seeks to reduce huge wheat stocks and help settle payment for a large oil import bill.
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