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India’s bulging grain stocks raise exports hopes

India’s bulging grain stocks raise exports hopes
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First Published: Wed, Mar 09 2011. 05 39 PM IST
Updated: Wed, Mar 09 2011. 05 39 PM IST
New Delhi: India’s bulging grain stocks prior to end-March harvest season make a strong case for lifting export curbs, but analysts say it is unlikely due to political compulsions ahead of state elections in coming months.
At 17.2 million tonnes, wheat stocks on 1 March were more than double the 8.2 million tones target, government sources said on Wednesday, while rice stocks rose to 28.75 million tonnes against a target of 11.8 million tonnes.
The sources said they believe India, the world’s second-biggest rice and wheat producer, can now afford to allow grains exports, banned since 2007.
India is on course for its second-highest food grains harvest in 2010-11, including a record 81.47 million tonnes wheat, which could help the government rein in food prices and allow overseas sale of wheat and rice.
“Healthy stocks before the start of harvesting season could help lift the export ban on wheat,” Veena Sharma, secretary of the Roller Flour Millers Federation of India, told Reuters.
Sharma said the government might review its wheat exports ban decision in May, when the harvest season ends.
India’s food price index eased to 10.39% in the year to 19 February, having climbed to a year’s high of 18.32% in late December, government data showed last Thursday.
Analysts, however, said the export curbs are likely to stay.
High food prices pose a political challenge, drawing voter ire ahead of state elections in coming months that will help determine the strength of the ruling Congress party-led coalition for the rest of its term.
“I don’t see an immediate withdrawal of the export ban on wheat despite the record production,” said Veeresh Hiremath, senior analyst with the Hyderabad-based broking Karvy Comtrade.
He also said the government would be keen to observe how procurement of the grain shapes up when harvesting commences later this month.
State-run Food Corp of India, the main grain procurement agency, buys wheat from local farmers between March and May, while it procures rice throughout the year from October.
The government buys rice and wheat from farmers to build reserves for emergency, run various welfare programmes and protect farmers from distress sale.
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First Published: Wed, Mar 09 2011. 05 39 PM IST
More Topics: Grain | Wheat | Rice | Exports | Agricu;ture |