India has sold 30,000 tons of milling wheat to the United Arab Emirates, its first private deal since late August as tightening Black Sea supplies open a brief window for exports from the subcontinent.
Along with lower output in major producers China, Brazil and Argentina, this has opened a window of opportunity for India to sell down its massive stockpiles before Australian new-crop supply enters the market from December.
India’s wheat stocks at government warehouses stood at 38 million tons as of September 1 against a target of 17.1 million tons.
“Global prices have risen as supplies are getting tighter in the Black Sea region while export terminals in the United States are busy with soy beans and corn,” said a Singapore-based trader.
“We expect more demand for Indian milling and premium varieties of wheat.”
Indian wheat with 12 percent protein was sold by private traders at $285 a ton, free on board, and with up to 13 percent protein was traded at $315 a ton. The cargo is scheduled to be shipped in November, two traders with knowledge of the deal said.
International traders are also in talks to sell up to 100,000 tons of Indian wheat to millers in Indonesia and Thailand, dealers said.
India, which had been aggressively selling wheat in the past two years, saw exports dwindle earlier this year with increased competition from low-cost suppliers such as Russia and Ukraine.
The Indian government has been unable to sell wheat in tenders in the last two months as it is unwilling to cut prices below $300 a ton, but rising world prices have revived export hopes.
Benchmark Chicago wheat prices have gained almost 9 percent in four weeks, rising to their highest in three-and-half months earlier this week on support from tightening supplies.
“The government may not need to cut prices now as the global market has risen,” said a Mumbai-based trader. “Australian prices have moved higher and buyers are looking at Indian to blend with Australian cargoes.”
But some other traders were of the view that the government should cut prices to make the most of this opportunity to reduce its stocks.
“They still might not find many buyers above $300 a ton,” said a trader in New Delhi. “Demand for wheat out of state stockpiles will be very strong if the price is around $265 to $270 a ton.”