India to Export 2 Million Tons of Wheat .

NEW DELHI -- India's federal cabinet Tuesday allowed exports of 2.0 million metric tons of wheat at a price not less than $228/ton in a bid to free up storage space in choked state-run warehouses, Food Minister K.V Thomas said.

The government also decided to appoint a panel of bureaucrats to oversee the export of wheat from the country.

"We are not going to export the entire quantity in one go, but in tranches, depending on the global prices," Mr. Thomas said.

"Wheat prices are firming up in the international market. We are not in a hurry to export," he said.

The decision means that the government would likely wait to get the best possible price for its wheat rather than sell at the base price of $228/ton, as international prices are around $275/ton.

It would be the job of the panel to ensure that the government derives the maximum commercial advantage, while also ensuring that its able to quickly ship out stocks that are more vulnerable to spoilage due to lack of storage space.

India's warehouses are overflowing as a result of bumper crops over the past two years. It's having to store around 6.5 million tons of wheat in makeshift spaces.

However, the minister had earlier said that he wasn't so worried about the storage problem that he would sell the government wheat cheaply.

The plan that has been cleared by the cabinet gives until March 2013 to complete the exports, said a food ministry official, who didn't want to be identified.

In May, the State Trading Corp had issued a tender for the export of wheat from government stocks. Six companies had bid with offers ranging from $150 to $230 a ton. Glencore International PLC, the highest bidder, had offered to ship 100,000 tons for $228-$230 a ton.

Government officials had been disappointed by the bid prices because they were far below international prices.

It was not immediately clear whether Glencore would be able to purchase any wheat from the government stocks as its bid price meets the government's base price set for exports.

However, the chances seem remote as the validity of the tender has lapsed since it was issued.

Fresh tenders are likely to be issued in coming months for wheat exports from government stocks.

Source : online.wsj.com