Indian traders have begun exporting wheat for the first time in four years, according to Reuters, as ample stocks, higher global prices and firmer freight rates have opened a window for them to make small shipments to buyers in Asia and the Middle East.
As per Reuters, ITC has started loading 22,000 metric tonnes of wheat at the western port of Kandla for shipment to the United Arab Emirates(UAE). Financialexpress.com could not verify the news independently.
India lifts wheat export ban
India, the world’s largest wheat producer after China, has allowed exports of the grain this year, lifting a ban on overseas sales imposed in 2022.
New Delhi extended curbs in 2023 and 2024 after extreme heat shrivelled crops and depleted stocks, pushing domestic prices to record highs and fuelling speculation it might need to import wheat for the first time since 2017.
Last year’s favourable weather led to a robust harvest, quashing speculation about imports, helping the government rebuild depleted reserves and giving it the confidence to allow exports.
Costlier Indian wheat limits export potential
Earlier this year, Prime Minister Narendra Modi’s government allowed traders to export 2.5 million tonne of wheat before permitting another 2.5 million tonne late last month for shipments.
Despite the permission to export, lower global prices and higher Indian rates dissuaded traders from signing export deals.
But the Iran conflict has pushed up freight costs and some buyers who need immediate shipments have turned to India, the trade sources said.
The deal to export 22,000 tonnes of wheat to the United Arab Emirates was signed at around $275 per tonne free on board, Reuters stated, citing souces.
Despite the first export deal in four years, India is unlikely to see a surge in wheat exports, as domestic prices have risen in recent days because of crop damage, making Indian wheat more expensive than rival supplies from Australia or the Black Sea region.
Australian and Black Sea supplies are priced at around $290-300 per tonne, including cost, insurance and freight, leaving Indian wheat at least $20 a tonne more expensive in global markets.
India wheat to attract short-term buyers
According to Reuters citing sources, only buyers with immediate supply gaps are likely to turn to Indian wheat, while those with adequate inventories of Australian, Argentine or Black Sea supplies will find it less attractive given its relatively higher prices.
Importers with urgent, short-term requirements and seeking shipments within 30-45 days are the most likely to buy Indian wheat, Reuters reported.
With the inputs from Reuters