India Won’t Lift Wheat Export Ban Despite High Stocks - Official

India banned wheat exports in 2007 to increase local availability and control prices, but a likely record harvest this year and already-high buffer stocks had prompted the federal government to consider allowing exports to free storage space for the new crop. Earlier this month, Farm Minister Sharad Pawar said a high-ranking ministerial panel will decide whether to lift the ban.

However, the food ministry official, who didn’t wish to be named, told Dow Jones Newswires that the panel will discuss wheat procurement from farmers but is unlikely to discuss the issue of exports at its scheduled meeting Thursday.

The official said the government has decided to be cautious as wholesale price index-based inflation in February surged 9.89% from a year earlier, its fastest pace in 16 months, fueled largely by food prices. Besides, the government is planning to soon introduce a law to ensure the supply of cheap food grains to the poor. Wheat output in India, the world’s second-largest producer, is expected to touch 82 million tons in the crop year ending June 30, 2010. That is higher than the 80.68 million tons the country produced in the last crop year. Wheat is sown in October-November and harvested from March-April.

Also, federal wheat stocks as of Feb. 28 stood at 18.38 million tons, nearly double the country’s buffer requirement for welfare programs. The ministry official said that the government will only allow exports of 250,000 tons of wheat to Nepal on government-to-government basis, but won’t permit any other exports.

A Food Corporation of India executive, who didn’t wish to be named, said the company will hire more storage space if the government decides to maintain the ban on wheat exports. State-run Food Corp. buys food grains from farmers for federal stocks.

Source CME Group