Indian wheat may fetch high price of $290/tn on Ukraine issue

SINGAPORE: Indian wheat is likely to fetch a price as high as US $ 290 a tonne in global markets in coming weeks as supply from Ukraine is likely to be hit by the escalating political turmoil there, traders said today.

The price of Indian wheat has risen by US $ 15 in the last three weeks and ruled at US $ 281-282 (free-on-board basis) this week, traders said on the sidelines of Global Grain Asia summit here. The wheat price may touch a high ofUS $ 290 per ton on free on board (FOB) basis in the coming weeks, they said.

"We see India exporting 500,000 tons of wheat to replace any shortfall from Ukraine due to political uncertainties," an international commodity trader said.

Traders are also forecasting India to export 5 million tonnes of wheat this year, up from 3.6 million tonnes shipped last year. "The regional wheat market is certainly getting better for India. We see Indian wheat exports increasing as long as prices are aboveUS$ 260 per tonne FOB," said a West Asian trader, requesting anonymity.

Preparations were underway at Indian ports for April shipments, with private traders having committed 200,000 tonnes and the state-tender basis volume of 150,000 tonnes to West Asian and South-East Asian markets, traders said. They said Indonesian wheat mills were looking for 40,000 tonnes from India while another said a 50,000 tonne Indian wheat tender was confirmed for April shipment to Bangladesh.

Indian wheat export to Saudi Arabia is also forecast to increase to 200,000 tonnes this year, up from 60,000 tonnes shipped last year, according to traders. If the Russian-Crimea political tension escalates, and the US-led trade sanctions are imposed on Russia, Indian wheat would cut into the Ukraine-Russian wheat share of West Asia and South East Asian markets.

Last year, the Indian wheat export was slower due to higher price bench mark. But prices are improving day-by-day these days, especially caused by the Russian-Crimea tension, according to the traders. India was sitting on a wheat stock of 28 million tonnes as on January this year. The country had allowed export of 2 million tonnes of wheat for 2013-14 fiscal.