With India keen to move grain to states hit by drought, the allocation of wagons to carry grain to ports for export has fallen by almost half, said P S Nathan, chief executive of Apoorva Agencies.
"From a level of about 350 wagons a day for exports, the allocation has come down to about 150," Nathan told Reuters in an interview on the sidelines of an Asian wheat conference. "I don't see the situation improving in the near future."
India has emerged as a key wheat supplier to many Asian countries in the past two years, with overseas sales hovering close to five million tonnes in 2002.
But Nathan, whose firm moved more than one million tonnes of grain last year, said exports could drop to as low as three million this year.
The shortage of railway wagons has led to lengthy delays in shipments, spurring many importers to avoid fresh contracts until the outstanding ones have been executed, he said.
"Shipments have been delayed, not by weeks but by months," Nathan said. "And a delay is a default if the other side is not willing to accept the delay. New contracts are not flowing in the way it used to be some time ago.
"Unfortunately, this is happening, not due to the unwillingness on the part of the trade to execute contracts, not because the government is not keen on exports, but due to the non-availability
"Priority is to move the grain for the common man than for exports."
Business slow
Despite these problems, India has managed to win some sales in the past months as global prices have remained high.
But now that world prices are falling following a better crop outlook in the United States, any move by the state-run Food Corporation of India to raise prices further could only put salt in the wounds of exporters, Nathan said.
"FCI has raised prices by almost $7.50 a tonne since December," he said. "I think we should not raise prices any more if we want to maintain our market share."
Indian wheat prices have steadily risen over the past months, to stand close to $129 a tonne FOB from around $113 in January.
"But the problem is that if somebody is asking me to quote a price, I tell him that I can quote you a price but I am not sure when I can deliver," Nathan said. "This makes the job of the buyer doubly difficult."
Wheat was now moving to Indonesia, the Philippines, Malaysia and Vietnam, Oman and the United Arab Emirates, he said.
"We have still not succeeded in selling the grain to Egypt despite sorting out the quality issues with them. Efforts are still on," he said.