Private traders in India, the world’s second-biggest wheat producer, have contracted around 270,000 tonnes of high-quality Australian wheat for shipment in July-August, trade sources said.
Traders expect India’s wheat output this year to be 10-12 million lower than an official estimate due to two straight years of drought in many wheat growing areas.
India’s agriculture ministry expects the country to produce 94 million tonnes of the grain in 2016 though there might be a downward revision after May by when the government’s purchase programme to run welfare schemes gets over.
A Mumbai-based trader said the output is going to be lower than the official estimate as evident from a poor response to the government’s purchase programme in major producing states like Madhya Pradesh.
“The market expects supply shortfall to be acute from October when the planting season starts,” said Tejinder Narang, a Delhi-based commodity analyst.
A Mumbai-based trader said the contracted quantities have been booked at $240-$245/tonne at Cost and Freight (C&F) basis from Australia.
Importers are opting for premium varieties from Australia over the Black Sea origin despite the latter being available at around $195/tonne due to quality concerns.
The contracted wheat quantities would start arriving from July on the southern coast, traders said.
They added the current 25 percent import duty on wheat is unlikely to be reduced immediately as the government would first want to see the spread of rains in the current monsoon season.