India to import 12,000 tonnes of wheat from Australia

NEW DELHI, Oct 31 (Reuters):  India has paid around $310 to $315 a tonne to import about 12,000 tonnes of wheat from Australia, despite overflowing grain bins at home, as flour millers and traders turn abroad for cheaper and more convenient supplies of high-protein wheat.
Indian flour millers have imported AWB Premium White Wheat (APW), which is blended with an indigenous variety to make some speciality breads. APW also has a high level of gluten, a protein that gives texture and lightness to dough.
"Some flour millers down south were looking for high-protein wheat, and we found imports easier in terms of both costs and logistics," said a trader from the southern city of Bangalore.
Two Delhi-based traders also confirmed the deal.
India's central state of Madhya Pradesh produces high-protein wheat, typically used to make pasta and noodles, but high domestic prices and freight costs spur millers near southern ports to look to exporters such as Australia.
APW wheat has a protein content of about 12 per cent, matching some Indian varieties, but lower costs and transport sometimes make imports from Australia more attractive, said Tejinder Narang, an independent trade analyst in Delhi.
India, the world's second-biggest producer and consumer of wheat, is sitting on huge stockpiles of the grain because of bumper harvests since 2007. The massive mounds of grain encouraged New Delhi to lift a four-year-old ban on exports in late 2011.
Since then the country has exported about 13 million tonnes of the grain, nearly half from government warehouses, but traders have failed to clinch deals after May and June this year because of higher prices at home and lower rates abroad.
Indian prices need to fall to $220 a tonne, free on board, from $290 a tonne FOB because rival supplies from Russia and Ukraine cost $230 a tonne FOB, traders said.
"Either we offer wheat at lower prices or there is an appetite in the global market where people are willing to buy at higher prices," Narang said. "But I do not see either of the options as workable, at least in the near future." Output in countries such as France and Romania, which together contribute about six per cent of total world production of nearly 715 million tonnes, will help keep a lid on global wheat prices, he said.
Indian prices have been fuelled chiefly by a steady rise in the price the government pays its farmers for their wheat.
On Wednesday, the government raised the wheat purchase price by 3.57 per cent to 1,450 rupees per 100 kg, more than doubling the guaranteed rate in the past 10 years.
Higher support prices for farmers, large inventories and exports have swelled a rising subsidy bill and drawn criticism from the World Trade Organization (WTO).
In July, India blocked a global trade reform at the WTO in a bid for more freedom to subsidise and stockpile grains.
India's wheat harvest this year was a record 95.9 million tonnes, up from 92.5 million last year. Farmers started planting in October and will harvest the crop next March and April.