India will find it tough to find buyers abroad for its wheat as the domestic cost of the foodgrain is higher than the global market, traders and analysts say. According to a New Delhi-based trader, it will be an uphill task, particularly with the government fixing the minimum support price for wheat at ₹2,585 a quintal, up ₹160 from last year.
Last week, the Government lifted a nearly four-year-old ban on wheat exports and allowed shipments of 2.5 million tonnes (mt). This was to ensure remunerative prices for growers after domestic rates dropped to ₹2,527/quintal in the first half of this month from₹2,587l in January.
Current prices
Currently, prices of domestic wheat delivered at Kandla port from Rajasthan, Gujarat and Madhya Pradesh cost between ₹25,200 and ₹2,5,500 a tonne. In dollar terms, wheat prices delivered at Kandla are pegged at $285-288 a tonne. If a freight rate of $20 a tonne is taken into account for the Middle East and South-East Asia, the cost and freight could be $305-308 a tonne.
At the same time, if Uttar Pradesh and Madhya Pradesh wheat is to be shipped from Visakhapatnam, it could cost $306-310 a tonne. In comparison, global wheat prices are ruling at $260 a tonne. “Though Indian wheat commands some premium in the Middle East, a difference of $45-48 will make it pricey,” said the trader. Another North India-based trader said Indian wheat will not be able to compete internationally as farmers are unlikely to offer wheat below the MSP.
