India sets out to sell more wheat but keeps price high

Reuters

(Adds analyst's quote on floor export price)

NEW DELHI, Sept 12 (Reuters) - India started another roundof tenders to sell wheat on Thursday after a gap of three monthsas it tries to sell 2 million tonnes to cut bulging stocks.

But its stubborn refusal to move from a minimum price of$300 per tonne set for earlier exports which failed to reachtheir target of 4.5 million tonnes is likely to keep interestsubdued.

India, keen to boost any exports in order to reduce a gapingcurrent account deficit and support the rupee, which has lost 16percent in value between from June to September, is reluctant tosell its wheat abroad below the level set for domestic buyers.

It said on Wednesday it had set a target of earning $600million from the extra quantity allowed to be shipped out by theend of the current fiscal on March 31.

On Thursday, the three state trading companies - State StateTrading Corp., MMTC and PEC - issued tendersfor wheat exports totalling 160,000 tonnes, the first suchoffers since June.

"It appears the government wants to test the market with thehigh floor export price of $300 per tonne against the backdropof the weak value of the Indian rupee," said Tejinder Narang, aNew Delhi based commodity analyst.

Narang said the floor export price is about $60 per tonnehigher than supplies from Black Sea origins, making the Indiansupplies unattractive to prospective global buyers.

India last year had allowed 4.5 million tonnes of wheat forexports to be sold by the three state run companies until June,2013. Out of that, 4.2 million tonnes was sold, earning $1.4billion for the government.

India's wheat production is about 93 million tonnes in 2013and demand is about 76 million tonnes. The government usesstocks to supply subsidised grains to the poor and for a bufferagainst years of drought and poor harvests. (Reporting by Ratnajyoti Dutta in NEW Delhi; Editing by JoWinterbottom)

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