Lost your password?
Don't have an account? Sign Up

India 2021-22 wheat exports seen falling 10% on year amid COVID-19 shutdowns: sources

Share This News Story:

NEW DELHI : After exporting a record quantity of wheat in 2020-21, India’s overseas sales of the food grain during the current marketing year are seen declining 10% over the year as localized lockdowns are propping up export prices, sources told.

India, the second-largest wheat producer, made a comeback as an exporter after several years as global prices climbed with inventories hitting a two-year low in 2020-21.

In the 2020-21 marketing season, India exported 2.1 million mt of wheat against 219,690 mt in the previous year, according to Agricultural and Processed Food Products Export Development Authority. India’s wheat marketing year runs from April through March.

“The climb in exports happened as neighboring countries such as Bangladesh and Nepal and some middle eastern nations bought from India as it was difficult to transport wheat from their traditional sellers due to the international movement restrictions to curb the spread of coronavirus,” Roller Flour Millers Federation of India President Anjani Agarwal said.

Exports also became viable for India as Russian supplies were limited following the announcement of export quota and floating tax, an Indian exporter said.

For the 2021-22 marketing year, the US Department of Agriculture estimated India’s wheat exports at 2.2 million mt against 2.3 million mt in 2020-21.

However, exporters fear that the country may not reach last year’s export levels as deals are happening at very slower pace.

Indian exports are still facing logistical bottlenecks in central states like Madhya Pradesh and Rajasthan, where markets are shut since early April to curb the spread of COVID-19.

We were expecting the situation to go back to normal as the COVID-19 caseload had fallen drastically earlier this year but as they skyrocketed, prices are also seen rising,” Bangalore-based exporter Pramod Kumar added.

Cases peak but normalcy yet to be seen

India has so far reported 28.3 million cases of COVID-19. A second wave struck the country with cases soaring from early April and reached a daily peak of 414,188 fresh cases on May 7, India’s health ministry data showed. However, the downward trend started mid-May and the country reported 134,154 new cases on June 3.

Despite the caseloads declining, several states are yet to ease restrictions as they fear dropping the guard now may lead to another spike in cases.

“It is still difficult to get trucks as drivers and other transport workers are still facing problems to get into the central states,” an official with All India Motor Transport Congress said.

So far Indian traders have signed deals to exports around 200,000 mt of wheat to Bangladesh and Nepal.

Export prices seen rising

Exports prices of Indian wheat may rise during the current marketing year following tight supply of crops across major trade centers. The Indian government has also been stepping up its purchases, now at 40.98 million mt of wheat, 13% higher on the year.

Domestic prices in the major wheat producing states range from Rupees 18,400-19,200/mt ($245-$246/mt).

India’s average export prices are seen increasing in the current year as spot prices have already risen, traders said. In 2020-21, the average export price of Indian wheat was at $263/mt.

Competitive Russian export tax

Meanwhile, Russian wheat, a competitor to India wheat in global markets, has been trading at lower prices. The 12.5% protein Russia wheat was being sold at an FOB price of $260/mt on June 2, data showed.

Indian exporters are concerned with Russia’s floating export tax that kicked in on June 2. Russian wheat exports in the week starting June 2 are taxed at a rate of $28.10/mt, the Russian Ministry of Agriculture said. This would be lower than an earlier export duty of $61 per mt that was applied to Russian wheat exports since March 1, after the government sought to control inflation for basic products, such as bread.

The floating export duty will be recalculated weekly and takes account of the prices from contracts agreed in the previous two months.

The floating tax has been fixed sharply lower and it is seen weighing on global prices, an official with a multinational firm said. “With India’s wheat prices seen rising it may lead importers to buy from other nations,” he added.

Exporters anticipate India’s exports might decline 10% in the current year as the global market may become more competitive with a likely rise in output.

The USDA pegged global wheat output in 2021-22 at 788.98 million mt, 2% higher from last year.

Source : Hellenic Shipping

Share This News Story: