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Flour, Maida Export From India Not Viable Despite Recent Spike In Global Wheat

6 Aug 2020 1:00 pm
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NEW DELHI (Commodities control) Short term silver line of price rise in global wheat showed some prospects for export of wheat products like flour, Maida and Sooji from India but in realty, huge gap in price parity does not allow Indian flour millers to export wheat products. Therefore, large stock will continue to pressurize the market sentiment.

Russian Wheat witnessed spike

Actually, increase in wheat price at CBOT and rise of export price in black sea wheat gave some hope for Indian flour millers. But parity in Indian and international prices is far from realty. In last few days, Russian wheat has witnessed price rise. Russian wheat with 11.5% protein was quoted around $236 per tonne, including cost and freight (C&F), this week to Indonesia. According to market sources, an unexpected spike in Russian and Ukrainian grain prices as farmers held on to their supplies. It made hard for wheat merchants to fulfil their commitment to sell to Asian millers. These merchants committed sales at between $217 and $222 a tonne in the last few months for August shipment. When traders started covering shorts, prices started rising.

Russian wheat export prices eased last week after three weeks of gains, under pressure from the new crop harvest and a weakening Rouble against the dollar. Black Sea-loaded Russian wheat with 12.5% protein was at $207 a tonne free on board for supply in August at the end of last week, down $3 from the week before. Indonesia, the world's second-largest wheat importer, takes around 900,000 tonnes a month, buying large volumes from the Black Sea region. Thailand and the Philippines mainly use Black Sea wheat for animal feed.

Global Wheat Slips Again

But this rally could not sustain in global market. Mr. Andrey Sizov, a prominent consultant of black sea grain market tweeted that wheat price down again as forecasters are getting more optimistic about new Russian wheat crop. CBOT wheat also came down to US cent 508.2 per bushel. It is big point for debate where CBOT wheat price came down due to Russian wheat crop prospects. But it was clear indication of surplus wheat at global level this year may put pressure on prices globally.

Parity At UDS 275 For Indian Millers

If we talk to Indian wheat, the prices are under great pressure due to heavy supplies and free distribution to weaker sections. Wheat prices were quoted in Delhi at Rs. 1890 per quintal (USD 252 per MT) which makes wheat products export unviable. According to Mr. Vikas Goel, a flour miller, wheat products cannot be exported from India until global prices move up to USD 270-275 per MT. He says that if the government brings wheat sale price at Rs. 1600 per quintal under OMSS, export may be possible. Mr. Sanjay Puri, president of Roller Floor Millers Federation of India (RFMFI) also echoed same. He said that government can off load 10-20 million ton of wheat by exporting it’s products to Gulf region and neighbouring countries but wheat price under OMSS needs to be reduced.

Mills Running With Under Capacity

Mr. Goel told that currently wheat flour in retail pack is being exported at USD 340 per ton to many countries of the world. While Maida and Sooji are exported by in bulk pack at around USD 300 per ton. But the export is very little in quantity. Chandigarh based flour miller Vinod Mittal says, flour millers are exporting Maida and Sooji to Far East countries as premium products but in little quantity. Mr. Goel says that our flour mills are running with under capacity utilization. Mills are running with 60 percent capacity due to lower demand of wheat products. Demand from economically weaker consumers reduced as the government is giving free wheat and rice. Flour mills’ capacity utilization can be improved by export of products but wheat price made it unviable.

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