India’s Wheat Exports to Hit a New High this Fiscal Year

On the basis of strong demand from nations in South Asia and South-East Asia, India's wheat exports are expected to reach a new high of between 6.5 million tonnes (mt) and seven million tonnes (mt) this fiscal.

"By December, we had exported 4.5 million tonnes of wheat. We already export 5-6 lakh tonnes of wheat each month, with 1.5-2 million tonnes of further shipments possible.” Exports could be in the range of 6.5-7 million tonnes, as per Nitin Gupta, Vice-President, Rice and Grains, Olam Agro India Ltd.

Competitive Rates

Wheat exports during the April-November period of the current fiscal were 4.11 million tonnes, valued at Rs 8,547.58 crore, according to the Agriculture and Processed Food Products Export Development Authority (APEDA). In comparison, overall wheat exports in the previous fiscal year were only 2.08 million tonnes, valued at Rs 4,033.81 crore.

India exported 6.51 million tonnes of wheat in 2012-13, earning $10,529 crore, and 5.57 million tonnes of grain in 2013-14, earning $9,277.65 crore. The US Department of Agriculture boosted its forecast for India's wheat exports this fiscal year to 6.5 million tonnes earlier this month, citing "strong export demand mixed with competitive Indian wheat pricing in neighbouring countries."

"In the region, India exports to Sri Lanka, the Philippines, and Bangladesh." "Indian wheat is currently priced between $300 to 305," said Gupta of Olam India. Wheat export prices peaked at $320 in December, but Australians supplying wheat with poor quality at a lower price proved to be a deterrent.

Argentina is presently offering $304 per tonne for upstream river delivery of its wheat, while France is quoting $324 for its Grade I wheat, according to the International Grains Council (IGC). Soft red winter wheat in the United States is commanding $347 a tonne, while hard red winter wheat is commanding $397 per tonne. At 295, the IGC wheat sub-index is up 28% year on year.

"The advantage India has is that Australia is oversold till March, so any country in the region looking to buy during this time must look exclusively at India," Gupta said.

Russia-Ukraine Standoff

"Even if it weren't for the fact that Australia isn't on the main shipping route, it has logistical issues." To go to Australia, ships must diverge from the mainline," said S Chandrasekaran, a trade analyst in New Delhi.

Ships bringing wheat to Africa or Southeast Asia can return carrying minerals, coal, or any other product in India, he noted, although this is not the case in Australia.

This is one reason why India's wheat exports could hit new highs this fiscal year, and any worsening of the Russia-Ukraine war could also assist India's wheat exports.

Production Prospects

After March, India would also benefit from the arrival of the fresh wheat crop on the market. "By the conclusion of the first half of this calendar year, no other country's wheat will have arrived." So, until then, India will be the only source of wheat," Gupta added.

According to the USDA, India's ending wheat stocks will be lower at 23 million tonnes as a result of the record exports. Wheat stocks were down to 33.01 mt on January 1 compared to 34.29 mt a year ago, according to FCI data. Wheat stocks with FCI were 27.3 mt on April 1 last year.

Aside from exports, the free distribution of 5 kg wheat to persons below the poverty line until March this year to help them overcome any difficulties they may experience as a result of the epidemic has also resulted in a reduction in stocks. The PM Garib Kalyan Anna Yojana distributes the food grains.