Turkey’s rejection of Indian wheat may be ‘political’ or a ‘corporate war’

Prabhudatta Mishra |Subramani Ra Mancombu | | Updated on: Jun 01, 2022

Indian seller firm, its Dutch buyer have got payments for the shipment

The Indian wheat consignment rejected by Turkey two days ago on phytosanitary grounds is reportedly due to “political reasons” or a “corporate war” in the importing nation.

The wheat consignment was not exported directly from India and the country’s diversified conglomerate ITC Ltd had sold it to a Netherlands-based trading house, according to official sources.

“”ITC actually sold the wheat to a Dutch firm on FOB basis, which in turn sold it to a Turkish company. Both ITC and the Dutch firm have received the payment for the deal. It looks like a political decision since the media reports point to a human disease, not found in crops, or could be a corporate rivalry in the importing country,” an ITC official, who did not wish to be identified, told  BusinessLine.

Dragged on assumption

Since ITC’s name appeared in the shipper’s column in official documents, many people assumed that it was exported directly by ITC to Turkey, the official clarified.  

Earlier, an official said: “The Centre has been notified about the rejection. We learn that the consignment relates to ITC Group, which has not sold directly to anyone in Turkey. The consignment was sold on FOB, basis weight and quality final, by buyer surveyor in India for an importer based in the Netherlands.” The official did not wish to be identified as he is not authorised to speak to the media.

Asked if the consignment is returning to Kandla as is being reported, the ITC official said the buyer has the liberty to sell it elsewhere and wheat prices have increased from the level it was sold before ban.   

Sourced from M.P.?

Benchmark wheat futures on the Chicago Board of Trade are currently ruling at $10.937 a bushel ($401.87 a tonne), a three-week low. 

According to reports, Turkey rejected 56,877 tonnes of Durum wheat as the consignment was detected with Rubella disease by the Turkish Ministry of Agriculture and Forestry. The shipments had taken place before India imposed a ban on wheat exports from May 13. 

The wheat has been, possibly, sourced from Madhya Pradesh, which grows the specialised grain used for making pasta and macaroni.

An exporter said if the consignment had been sold on FOB (Free-on-board) basis weight and quality final means a third party, mainly an international surveyor, will inspect the consignment and decide on the tonnage and quality. 

Opposition to Article 370

A trade analyst wondered how the Rubella disease has cropped up all of a sudden in an agricultural crop. The analyst, who did not wish to be identified, suspected it could be a “political” decision given the fact that Turkey is inimical to India right from the time India scrapped Article 370 that gives special status to Kashmir. 

An exporter also expressed the same concern saying the decision to reject could be political than on the quality of the consignment. 

However, a second exporter said the presence of some anti-microbial element could have been found in the consignment and could be a little worrisome. “Turkey is short of wheat and the rejection may not be for political reasons,” he said. 

Lower output, procurement

India barred wheat exports from May 13 after a heatwave sweeping across the country affected wheat production and the Food Corporation of India (FCI) was unable to procure ample quantity of the grain for supply through ration shops.

This was since open market prices were higher than the minimum support price of ₹2,015 a quintal in view of huge demand for exports. Currently, the weighted average modal price (rates at which most trades take place) in various agricultural terminal markets in the domestic market is ₹2,066 a quintal. 

Wheat production this year is estimated at 106 million tonnes (mt) lower than initial projections of a record 111.32 mt. The FCI procured only 18.75 mt of wheat as of May 30 against 43.44 mt last year. As of May 1, the parastatal agency had 30.34 mt of wheat stocks against 52.57 mt a year ago. 

Last fiscal, India exported a record of over 7.5 mt of wheat and this year it targeted to top it before the hot weather and poor procurement derailed its plans. India is not a top exporter but the Russia-Ukraine war has resulted in supply shortage and prices soaring leading to demand for its wheat. 

Russia and Ukraine make up 30 per cent of the global market and the geopolitical crisis has resulted in supplies from both nations being affected. 


Published on June 01, 2022
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