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New Delhi: Wheat shipments from India may drop next year to the lowest since 2011 as global prices near a four-year low undercut exports from the world’s second-biggest producer.

Exports will probably total 1.5 million metric tons in the year starting 1 April, according to the median of estimates from seven traders, analysts and industry officials compiled by Bloomberg. That would be the lowest since 891,000 tons in 2011-2012, and compares with 3.5 million tons this year, US department of agriculture data show.

Wheat in Chicago has fallen 27% in the past year on expanding supplies, helping lower global food costs measured by the United Nations to the lowest since 2010. Total world grain production, excluding rice, will probably advance to a record this year, the International Grains Council said 22 January. Abundant supplies from Europe and the Black Sea region are edging out Indian wheat from markets in Southeast Asia, according to Tejinder Narang, a New Delhi-based consultant.

“Internationally, wheat prices are under pressure and I don’t think there is any reason why Indian values will be competitive in the global market," Atul Chaturvedi, the chief executive officer of agriculture business at Adani Enterprises Ltd., said by phone from Ahmedabad on 10 March.

World wheat output reached a record 724.76 million tons in 2014-2015, according to USDA data on 10 March. That may help expand global grain stockpiles to 432 million tons, the highest since the mid 1980s, the council estimates.

Record harvests

India’s wheat harvest may total 95.8 million tons in 2014-2015, near the record 95.9 million tons a year earlier, according to agriculture ministry data. That may boost domestic inventories and reduce prices of flour, cookies, bread and cakes, according to Faiyaz Hudani, associate vice president at Kotak Commodity Services Ltd. in Mumbai.

Wheat for May delivery traded 0.7% higher at $5.02 1/2 a bushel on the Chicago Board of Trade by 4:47 pm in Mumbai on Thursday. Futures are down 15% this year, after slumping to $4.66 1/4 on 25 September, lowest since June 2010.

With the arrival of the new crop, Indian wheat for delivery in April is about 1,000 rupees ($16) a ton cheaper than spot prices, said M.K. Dattaraj, a former president of the Roller Flour Millers Federation of India. Export prices from the South Asian country are about $45-50 a ton more than European supplies destined for the Middle East, Narang said. Indian flour mills may even have an incentive to import grains in the south, he said.

“We are out of the market and Indian wheat needs a subsidy of $75 a ton to compete in the world market now," Narang said. “Euro is running the wheat market. Theoretically, Indian flour millers should be importing French wheat through ports in southern parts of the country."

India has no immediate plan to export wheat from state reserves, food minister Ram Vilas Paswan said 18 February. State agencies held 20.9 million tons of wheat in stockpiles as of 16 February, he said on 5 March. Bloomberg

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