India Grain Export Prospects Fade .

NEW DELHI – The prospects of India exporting wheat and rice have virtually disappeared, industry officials said Wednesday following a forecast that rains in the June-September monsoon season will be below normal.

Farm Minister Sharad Pawar had favored allowing wheat and rice exports as government stocks have hit an all-time high, but now the government is unlikely to push through any decision before assessing plantings during the entire season.

Monsoon rains, crucial for the country's rain-dependent farmlands, have been forecast a shade below normal at 95% of the 50-year average. Sowing of summer crops such as rice, oilseeds, sugarcane and pulses starts with the arrival of the seasonal rains.

"I doubt very much [that exports will be allowed]," said a senior Mumbai-based executive of an international commodities trading company.

"As it is, there is little parity left for exports from India."

International prices for milling wheat are ruling at $280-$290/ton freight on board, whereas the cost of Indian varieties would likely be around $310-$320/Ton FOB, he said.

India, the world's second-largest wheat and rice grower, has maintained a ban on wheat exports since 2007 and on rice since 2008 to keep local supplies steady.

"Not only have international grain prices softened, but there are also political reasons [to continue the ban on exports]," said another executive with one of India's top commodities company.

"The government is now tying up the last threads of the food security bill and inflation is still high. They wouldn't like to take chances by allowing exports now," he said.

Even though government foodgrain stocks have swelled to three times its present requirement at 65.5 million tons, the stock requirement will increase once the government enacts the food security law.

The food security bill promises to give cheap grains to 70% of the country's population and is likely to be introduced in parliament during the next session, which starts on August 1.

Industry officials said it's unlikely that any decision on allowing grain exports will be taken before the rainfall in July and August is assessed.

Rainfall during July and August accounts for more than 60% of the seasonal showers and is forecast to be 93% and 94% of the 50-year average, respectively. Monsoon rains were 11% above the long-period average until June 21.

Government granaries have run out of space and mounds of grain are being stored in the open in key northern region producing centers.

"It's a pity that exports are not being opened up immediately. Large quantities of grain will probably be washed away by monsoon rains by the time any decision is taken," said one industry executive.

Source : online.wsj.com