India Becomes Major Wheat Supplier to South and West Asia as Global Prices Soar

India has emerged as a major supplier of wheat to countries in South Asia and the Indian Ocean region, mainly in West Asia, as world market prices nearly peaked. eight years, according to officials and industry experts.

Rising freight costs have also prompted these countries to turn to India to meet their demand for wheat.

According to the Agricultural and Processed Food Export Development Authority (APEDA), India exported 19.86 tonnes lakh (lt) of wheat during the fiscal year April to August, compared to 2.63 lt. during the period of the previous year.

USDA projection

The United States Department of Agriculture, in its report “Grain: World Market and Trade”, projected India’s wheat exports at 45 lakh tonnes (lt), the highest since it shipped 55.72 lt in 2013-14. Foodgrain shipments are estimated to have exceeded last year’s total shipments by 20.86 liters to date.

“Basically Indian wheat is in demand because Russia and Australia have higher prices for their products. The increase in freight rates has also contributed to the demand for Indian wheat, ”said Rajnikant Rai, division general manager, ITC Agri-Business.

Indian wheat has not only gained in volume but also in price. “In April, we started exporting wheat at $ 265 a tonne. Currently we are exporting at $ 315-18 per ton, ”Rai said.

In comparison, Argentina quotes at $ 296, France at $ 327, soft red American winter wheat at $ 322, Australian feed wheat at $ 433 and Black Sea wheat (Russia, Ukraine) at 312. , $ 75 per ton.

Higher prices in the world market are also reflected in domestic prices, which hover around this year’s minimum support price level (MSP) of 1975.

The injured millers

“Current exports and prices have made it difficult for the domestic milling industry. We have to pay 25 yen per kg for wheat from 20 to 21 yen a few months ago, ”said Pramod Kumar, vice president of the Roller Flour Mills Federation of India.

Although export officials say millers can source wheat from the Food Corporation of India (FCI), which sells stocks it holds at prices depending on the year of harvest, Kumar said Bidding standards had made it difficult for any sucker to bid.

However, exporters say they source wheat on the open market for overseas shipments. “We are not supposed to export wheat stocks purchased from FCI,” Rai said.

The centre’s strategy

An import-export manager for a Delhi-based multinational said the Centre’s strategy may be to satisfy producers in states such as Uttar Pradesh, Punjab and Uttarakhand, where the elections for the Assembly are scheduled in six months.

A business analyst said the government could encourage wheat exports in two ways. First, it will help reduce the huge stocks that are transported every year. Second, it could also be about reducing FCI’s debt burden, which stands at nearly five lakh crore.

“Additionally, with trading partners pressuring India at the World Trade Organization to end PSM, the Center may try to ship more when the going is right,” he said. .

FCI actions

As of October 1, the FCI had 46.85 million tonnes of wheat stocks against 43.73 million tonnes in the previous year period. The Company is mandated to have 17.5 million tonnes of operational inventory and two million tonnes of strategic reserve during the period.

Mukesh Singh, director of MuBala Agro Commodities Pvt Ltd, said Bangladesh places orders for Indian wheat on a daily basis. “For Bangladesh, it is cheaper to buy Indian wheat especially because the transportation costs are low,” he said.

According to APEDA data, Bangladesh imported 13.13 lt of wheat from April to August compared to 11.57 lt for the whole of fiscal year 2020-21. The USDA has set Bangladesh’s wheat imports at 74 lakh tonnes this year.

Road expeditions

Most wheat shipments are transported by road to the neighboring country, and trucks carrying wheat account for almost a third of the total vehicles crossing the Ghojadanga border. For example, on October 19, 92 trucks were transporting wheat to the neighboring country out of 312 passing through the border.

“We are able to get average good quality wheat at 19.50-21 kg from Bihar, Bengal and Odisha. Wheat is also available in Uttar Pradesh, but freight is expensive, ”said Singh, who exports wheat and corn.

ITC’s Rai said Bangladesh and countries in West Asia were the top two buyers of Indian wheat this year. “In addition, Indian wheat has started going to Indonesia and the Philippines,” he said.

One of the main reasons Indian wheat has made inroads into the world market is that in addition to being competitive, its quality has also improved, Rai said.

Good prospects until March

The ITC official expects the current pace of wheat exports to continue through the end of the current fiscal year. “No other crop can come to market until then. Importers are countries that buy regularly and India has now become an option, ”said Rai.

The USDA predicts that global wheat consumption will increase sharply from production this year. As a result, world wheat exports would hit record levels, pushing stocks to their lowest level in five years.

Global production will only be slightly higher, as production in the United States, Canada, Kazakhstan and Iran has been affected. Declining Canadian production will cause the North American nation to ship 15 million tonnes less wheat this year. We see India winning part of the gap, Australia and Europe being projected as the other winners.

India has also benefited from record wheat production over the past two years. In 2019-2020 India produced 107.86 million tonnes and in 2020-21 production increased to 109.52 million tonnes.

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