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08 Mar 2022 | 06:02 UTC
By Sampad Nandy
Highlights
Wheat exports seen at 7 mil mt in MY 2021-22, 10 mil mt in MY 2022-23
India offering wheat at $310-$320/mt; prices may reach $350/mt near-term
Lower export prices seen boosting India's wheat shipments in MY 2021-22
India's wheat exports are likely to skyrocket over the next few months as buyers scout for alternatives to Black Sea wheat after trade flows were hit by Russia's military invasion of Ukraine(opens in a new tab) Feb. 24, sources said.
India's wheat exports are likely to soar over 200% on the year to a record 7 million mt in the current marketing year 2021-22 (April-March), trade sources told S&P Global Commodity Insights. Volumes could rise as high as 10 million mt for the subsequent marketing year if the war leads to stricter sanctions on Russia.
Indian traders had signed deals to export over 6 million mt of wheat until February, market sources said. Until December, India had exported over 5 million mt, nearly fourfold higher on the year, Agricultural and Processed Food Products Export Development Authority data showed.
"India has been struggling with huge wheat inventories and private traders are looking to gain from the global supply shortages that have emerged due to the war," an official with a multinational grain trading firm said.
The country had several seasons of record harvests and poor exports. Its outflows were last higher at 6.5 million mt in MY 2012-13. India is the world's second-largest producer of wheat after China but consumes most of its wheat to meet domestic requirements.
The Black Sea region is the largest supplier of wheat. Russia and Ukraine's combined wheat exports for MY 2021-22 were estimated to account for 23% of global outflows of 206.9 million mt, according to the US Department of Agriculture.
India is likely to benefit from a disruption in Black Sea flows, as export prices of wheat from Australia and Canada are sharply higher and concerns about global supply shortages are exacerbating food inflation worries.
India is offering wheat at around $310-$320/mt currently, and the prices may go up to $350/mt over the next few weeks, market participants said.
While Australian wheat prices have gained sharply over the past few weeks since the war began, Canada and the US are facing severe supply shortages due to extreme dry conditions.
Australian Prime White wheat prices were assessed at $416.50/mt March 7, up 18% on the month, and Canadian Western Red Spring wheat was at $484.47/mt March 7, up 20% on the month, according to S&P Global data.
Argentina, another key supplier, meanwhile, has decided to limit its shipments to keep domestic inflation in check.
India has been targeting new buyers, such as the Philippines, South Korea, and Lebanon, while maintaining exports to traditional importers, including Bangladesh, Sri Lanka, and the United Arab Emirates.
Philippines, South Korea, and Lebanon typically seek wheat from Australia and Russian markets.
"India is likely to benefit from its lower prices as there is a severe supply shortage and importers are looking for alternative sources for wheat," an exporter based in Delhi said.
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