By Naveen Thukral and Mayank Bhardwaj
SINGAPORE/NEW DELHI (Reuters) - A rally in global wheat prices and a looming tax on Russian exports have set the stage for a resumption in India's overseas sales, although cheaper European supplies could provide stiff competition to the South Asian nation.
Exports by the world's No.2 wheat producer after a six-month gap could cap benchmark wheat prices which soared 20 percent in the past quarter on worries over Russian supplies.
"India is in a unique position to make the best out of the export curbs put in place by Russia which was exporting wheat similar in quality to Indian wheat," said a trader with a leading global trading company in New Delhi.
Russia, a key wheat exporter, plans to introduce a duty of at least 35 euros ($41) per tonne on shipments from February to curb a rise in domestic prices.
India could sell around 2 million tonnes of wheat between February and July to Asian buyers as Russian supply dries up, traders and officials said.
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While this is small versus a global trade of around 160 million tonnes, it is important for Southeast Asian millers looking for prompt shipments.
"Importers such as Indonesia, Vietnam, Malaysia and Bangladesh will be taking Indian wheat because of the freight advantage over European cargoes," a Singapore-based trader said.
Southeast Asian buyers pay a freight rate of $12-$15 a tonne to get wheat from India and up to $30 to get grain from Ukraine.
There has been talk among traders that India could start issuing tenders to sell wheat from reserves from February. Government stocks were at 25.1 million tonnes as of Jan. 1, more than three times the target.
"The government hasn't taken any decision on tenders yet but there are discussions going on between trading companies and the Food Corporation of India on export prospects and prices," an official at a state-run trading company said.
India is set to procure wheat from farmers at about $230 per tonne this season, 3.7 percent higher than last year.
In the export market, Indian wheat was offered by private traders at $270 per tonne free on board, while French wheat was sold at $248.94-250.25 recently. Australian standard wheat is at $270 and Ukraine milling wheat is available for $265.
But Indian wheat is still "attractive for buyers in Asia because they buy in smaller parcels and shipping time is shorter", a second Singapore trader said. "There is a strong possibility of a couple of million tonnes coming from India."
($1 = 0.8482 euros)
(Editing by Himani Sarkar)