India forced to improve quality of export wheat

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Published: August 23, 2001

NEW DELHI, India – Long-term wheat export prospects for India could improve in September when uncertainties over price and quality might be resolved, traders say.

India, keen to cut its 30 million tonne stockpile, has seen its sales hit by quality concerns.

“No major sales have been reported in recent weeks as buyers are adopting a wait-and-watch policy. Quality is still a matter of concern among buyers,” said Apurva Dave, manager at Adani Exports Ltd.

Iraq rejected three wheat consignments from India in May, saying they did not meet its quality standards. The decision prompted New Delhi to halt sales to Baghdad until new grain cleaning facilities were set up.

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New Delhi-based Priyanka Overseas Ltd., whose two cargoes of 27,500 tonnes were rejected by the Grain Board of Iraq, has begun a trial run of its cleaning facility at Gandhidham, near the western India port of Kandla.

Ahmedabad-based Adani Exports and Vishal Exports Overseas Ltd. are also putting up similar facilities, which should be ready in the next two to three months.

Traders said the cleaning is likely to push up the cost of wheat by $5-$7 US a tonne, but quality will be improved.

They said dealers were also awaiting a decision from the government to cut the price of wheat for exports to $88 a tonne from $92 to compete better in the market.

“Sales, which are currently dull, should improve if the government reduces the prices,” said a senior official at a state-run trading house.

India, which resumed wheat exports in October 2000 after a gap of nearly three years, has set an export target of five million tonnes for 2001-02 (April-March).

It has shipped out almost the entire three million tonnes of wheat contracted for sales since October.

“With Indian traders quoting $108-$110 per tonne f.o.b., buyers are looking at cheaper wheat from countries like Ukraine and are showing interest only at $103-$104 per tonne,” said an official of an international trading firm.

Traders said wheat export prospects have improved with fresh trade inquiries from Southeast Asia and the Middle East. Dave said Bangladesh has shown some interest, but the bulk of demand would come from Dubai, Yemen and Sudan.

Traders said inquiries were also being received from Indonesia and the Philippines.

A senior official of a Bombay-based grains trading firm said global prices of wheat might improve by October as the crop outlook in many countries is not optimistic.

Global stocks are also lower in September and October when most leading exporters complete selling.

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Hari Ramachandran

Reuters News Agency

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