May 22, 2021
Exports of grains affected. Delays and lockdowns hit exports 5%-10%
The Indian wheat exports have been rocked and hit a roadblock over the past few weeks as the fresh wave of lockdown has forced shutdowns and impacted key operations across the country.
Referring to the emerging bottlenecks at certain major ports of costal India, like Kandla, Mumbai’s Jawaharlal Nehru Port, and Visakhapatnam, the food industry is witnessing disturbances on the supply side as most major grains markets face total close down.
“With major markets shut, supply has tightened in open markets and prices are rising,” informed a trader from Indore, Madhya Pradesh.
As supply turns scarce across markets, exporters are also facing difficulties in sourcing the grain for outbound shipments as logistical bottlenecks are creating hurdles, an official with a global food firm said.
“At times it is difficult to find vehicles to transport the commodity from different states. It will start impacting exports soon if the restrictions continue for long,” Delhi-based exporter Anand Goyal said.
According to the sources, Indian traders have signed deals to export 200,000 mt over the next few months for the golden grain.
Most of the wheat is expected to be sent to Bangladesh and Nepal, they stated.
“If the logjams continue for the next few weeks, it will become difficult to export,” a Bangalore-based exporter Pramod Kumar cited.
As India’s wheat marketing year runs from April through March, from 2021-22 marketing year, the US Department of Agriculture has estimated India’s wheat exports at 2.2 million mt against 2.3 million mt the year last.
India is the second-largest wheat producer in the world but it was unable to export weighty quantities of wheat for several years because its wheat prices were higher compared with other global players due to higher domestic prices. However, given the climb in global wheat prices as inventories had slumped to a two-year low, India finds itself in a position to export wheat once again.
“However, with the difficulties that exporters are facing now, it may dent annual exports by 5% to 10%,” an MNC official said.
As supplies run low, export prices are set to rise, traders said.
With most major markets shut, Indian farmers are selling their produce to the government at a price higher than prevailing market rates, they said.
Conferring to a data source, in the current marketing year that started in April, the government has bought 38 million mt of wheat, 21% higher than last year.
“The government purchases are rising sharply from last year. This will also limit supply for exports and might lead to a rise in the average export prices,” Goyal said.
Domestic exporters anticipate they may also have to turn to the government to source for grain and it will eventually increase viable export prices.
The government has set the base price for auctioning good-quality wheat at Rupees 21,500 per mt ($294/mt). It will also sell poor-quality wheat at Rupees 20,000/mt.
“Both these prices are sharply higher than the prevailing market prices. In major markets the price is much lower,” Goyal added.
“If exporters have to purchase the wheat from the government it will become expensive,” said a Bengaluru-based exporter.