India's state traders received bids above the floor price for wheat exports, trade sources said on Monday, reflecting good response after a cut in the floor price intended to boost shipments from the world's second-biggest grower.
Last month, India cut the floor by $40 a tonne to $260 for supplies from government stocks, to make exports more attractive to the Middle East and neighbours such as Bangladesh.
The three state-run trading companies had all failed to sell in the last round of global tenders in October, when the $300 floor made Indian wheat expensive in comparison to rival supplies from the Black Sea.
In Monday's tenders, PEC Ltd received the highest bid at $290 per tonne for its offerings on thewest coast for shipment in December, while State Trading Corp and MMTC Ltd recorded bids of $286 a tonne in their respective tenders.
"Indian supplies have become on par with Black Sea origin," said Tejinder Narang, adviser at Delhi-based trading company Emmsons International.
Traders said supplies from the Black Sea were available at $280-$290 a tonne FoB.
They said Indian wheat was benefiting from expectations that global prices would rise next year as supplies from the Black Sea fell.
The Indian government stuck to its floor price of $300 until last month after managing to export nearly 4.5 million tonnes between August 2012 to March 2013 as part of its strategy to cut huge stockpiles.
On November 1, India's wheat stocks stood at 34 million tonnes, three times more than the target for the Oct-Dec quarter.
The high level of stocks at government warehouses, boosted by a series of bumper harvests since 2007, has forced the state-run Food Corporation of India (FCI), the main grain procurement agency, to store wheat under tarpaulins.
Copyright @ Thomson Reuters 2013
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