Agri Business

Indian wheat exports gain as global prices surge

Subramani Ra Mancombu Chennai | Updated on August 31, 2021

1.5 mt estimated to have been shipped so far; Bangladesh, Gulf nations turn major buyers

 

Wheat exports from India have increased sharply and are bound to do well this fiscal as global supplies have been affected by lower production in the US, Russia and Canada, industry and trade officials said.

“Exports could be anywhere between 2.5 million tonnes (mt) and three mt this fiscal as there is good demand for Indian wheat, So far, 1.5 mt of wheat have been exported,” said Nitin Gupta, Vice-President, Olam Agro India Ltd.

Trade sources said India could easily export 2.6-2.7 mt of wheat this fiscal compared with 2.08 mt valued at ₹4,033.81 crore last fiscal.

Shipments up 10 times

According to Agricultural and Processed Food Products Export Development Authority (APEDA) data, wheat exports during the first quarter of this fiscal were 1.1 million tonnes valued at ₹2,142 crore. During the same period a year ago, exports were 0.11 mt valued at ₹234 crore.

The US Department of Agriculture, in its “Grain: World Markets and Trade”, raised its outlook for Indian wheat exports this month to 2.6 mt from its earlier estimate of 2.3 mt. It expects the shipments to be the highest since 2014-15, when 2.91 mt were exported.

“Wheat exports are reported to have increased significantly during July. Probably, it could have doubled compared to what we saw during April-May,” said Pramod Kumar, Vice-President, Roller Flour Mills Federation of India (RFMFI).

More gains since July

In July, demand for Indian wheat increased after global corn (maize) prices exceeded the foodgrain’s prices. However, wheat prices have since gained and September contracts on Chicago Board of Trade are currently quoted at $7.05 a bushel ($259 or ₹18,950 a tonne).

Also read: Bangladesh offers hope as corn exports to South-East Asia slow down

On August 16, CBOT September wheat contracts had increased to $7.62 cents a bushel ($279.98 or ₹20,450 a tonne).

Wheat exports during April-July are provisionally estimated at about ₹2,400 crore, said trade sources.

Gupta said initially, Indian wheat headed towards Indonesia and then West Asia. “Currently, most of the wheat is exported to Bangladesh,” he said. Kumar and other traders said a good quantity of wheat is being exported to the Gulf region.

Key importers

APEDA data show that Bangladesh imported 0.39 mt of wheat during April-June, while last fiscal it bought 1.15 mt from India. Nepal, Sri Lanka, United Arab Emirates, Qatar and Indonesia - in that order - are the next big buyers of Indian wheat this fiscal and last fiscal.

A Delhi-based trade expert said that Indian wheat is mainly going to Bangladesh, Sri Lanka and Djibouti. “Gulf countries are buying Indian wheat for feed purposes,” the expert, who did not wish to be identified, said, adding that huge buying by buyers abroad is taking place.

No trader or official could exactly say the amount of wheat contracted for exports over the next few months despite sounding confident over the export prospects.

“Indian wheat exports began at $260-265 (₹19,050-400) and are now quoting $290-295 (₹21,225-21,600) a tonne free-on-board (F.O.B),” said Olam’s Gupta.

Domestic supplies tighten?

“Indian wheat is competitive compared with even wheat of Black Sea origin, which is basically from Ukraine,” said RFMFI’s Kumar. “But the shipments have tightened supplies for domestic users such as flour mills,” he said.

Arrivals of wheat, harvested during March-April, still continue at agricultural produce marketing committee (APMC) yards, though they are down compared to the peak harvest period. Currently, prices are higher than rates during the same time a year ago with arrivals being nearly 30,000 tonnes during August 1-30, almost the same as last year.

At Rajkot APMC yard in Gujarat, wheat prices are currently ruling at ₹1,820 a quintal against ₹1,690 during the year-ago period. Prices are, however, lower than the minimum support price of ₹1,975 a quintal fixed by the Centre this year.

Good response to FCI tender

“There is good demand internally too. In the recent Food Corporation of India (FCI) tender to sell wheat under the Open Market Sale Scheme, all 4.5 lakh tonnes on offer were bid. Even States offtake is good,” said RFMFI’s Kumar.

Under OMSS, FCI sells wheat at predetermined prices with rates differing based on the production year. Currently, FCI is offering wheat from the 2019 crop onwards.

A Delhi-based multinational firm’s trade official said that the exports should not trouble domestic users as India had ample stocks of wheat with it. “This should help India clear a part of its inventories,” the official, who did not wish to be quoted, said.

Locational advantage

Trading sources said Indian wheat also enjoyed a locational advantage with regard to the Gulf countries. With freight charges soaring and vessel shortage affecting supplies, India was well placed to benefit since shipping charges are lower than western destinations such as the US.

India’s exports have also been aided by record wheat production over the last two seasons. During the 2020-21 season (July-June), wheat production has been estimated at a record 122.27 mt compared with 118.87 mt the previous year.

As on August 1, FCI carried 56.48 mt of wheat stocks compared with 51.32 mt a year ago. FCI stocks are higher after the Centre procured a record 43.32 mt of wheat from farmers this year against 38.99 mt last year.

 

Published on August 31, 2021

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