Agri Business

MP wheat traders threaten to move HC as exporters cancel deals citing export ban

Prabhudatta Mishra | | Updated on: May 27, 2022
India banned exports of wheat on May 13 after the grain’s production was affected by the heatwave that swept across the country in March and April, while the Food Corporation of India (FCI) was unable to procure even 50 per cent of the target set for this year for buffer stocks and distribution through the public distribution system.

India banned exports of wheat on May 13 after the grain’s production was affected by the heatwave that swept across the country in March and April, while the Food Corporation of India (FCI) was unable to procure even 50 per cent of the target set for this year for buffer stocks and distribution through the public distribution system.

At least 50,000 tonnes of wheat are at stake and currently at different stages en route to the port

About 50-odd traders in Madhya Pradesh on Friday decided to move the State High Court seeking immediate lifting of grains by exporters as they have already purchased at the contracted prices and are refusing to take possession of the grain. It will force them to sell at a lower price as rates have declined after the Centre banned wheat exports with immediate effect from May 13.

“At least 50,000 tonnes of wheat are at stake and currently at different stages en route to the port before some companies cancelled the orders. There are very small traders involved who had purchased a few hundred quintals based on the orders issued by the exporters,” said a trader who attended the meeting.

‘Need government intervention’

“If the exporters did not have valid Letters of Credit (LCs) why did they place the order with small traders,” he wondered, seeking a little intervention from the government. This was what the traders were expecting as the ban caught everyone by surprise. There are also cases where some traders have delivered the wheat at ports at ₹100-200/quintal lower than contracted rates, while some others are yet to receive payment from exporters, sources said.

A legal notice sent by a trader in Uttar Pradesh to a Raipur-based exporter for refusing to take delivery of over 2,000 tonnes of wheat, which was to be supplied at ₹2,585/quintal at Gandhidham, claimed the amount involved was ₹60 lakh. Many traders have also been considering to send similar notices to exporters who have cancelled orders or not taking delivery, sources said.

Wheat exporting firms are backing out of contracts in the domestic market following India’s export ban, with ITC Ltd being one of those firms declaring force majeure for consignments delivered at port locations.

ITC, in a letter to suppliers and brokers, said purchase contracts with them had been entered for wheat exports from India. But the ban on the grain’s export has resulted in a force majeure event. “...all our balance contracts with you stands cancelled at par with immediate effect,” the firm said.

Cargill, earlier this week, claimed that it has met all its obligations with Indian wheat traders and brokers and denied allegations that it had cancelled its contracts with domestic traders. But it also said the orders that were cancelled were done through mutual agreement with its suppliers. “Out of the total procurement we did, if I am right, less than one per cent of the orders has been washed out,” said Simon George, President, Cargill India.

Meanwhile, Union Agriculture Minister Narendra Singh Tomar has said there is no shortage of wheat in the country and the export ban was imposed to check “rampant” overseas sales of the grain. Speaking to the media at Gwalior on Friday, he said it was the government’s duty to maintain a balance in the market.

Published on May 27, 2022
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