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Indian wheat seen making bigger inroads into global markets in 2020-21


India's 2020-21 wheat exports to soar 270% on year

Russian curbs may benefit India expand its exports

Indian domestic stocks hit multiyear highs, prices ease

New Delhi — Indian wheat is expected to make bigger inroads into global markets in 2020-21 marketing year (April-March) for the first time in six years, led by tightening supplies from major exporters and a swelling domestic inventory.

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India is likely to export 2.2 million mt of wheat in the 2020-21 marketing season, up 269.7% from a year ago, the US Department of Agriculture said in its World Markets and Trade report Feb. 9.

The last time India shipped big volumes like this was in 2014-15, when wheat exports hit 2.9 million mt, data from India's Agricultural and Processed Food Products Export Development Authority, or APEDA, showed.

This preceded with Indian wheat exports peaking in 2012-13, when it shipped around 6.5 million mt, but after 2014-15, exports dipped sharply as domestic prices rose in the country, making exports expensive.

However, large inventories in India due to higher production and lower export prices in the current season are expected to change the trade scenario.

India's wheat production in 2020-21 is expected to surge beyond 100 million mt, according to analysts.

USDA sees India's 2020-21 wheat production at 107.6 million mt, up 3.9% from the period last year, and higher in at least last five marketing seasons. Similarly, India's wheat ending stocks were seen at 27.5 million mt in 2020-21, the highest in last five years.

In recent months, Indian export prices have also eased while prices for major suppliers have risen.

Russia's export quota announcement and tax sent prices for the country and other suppliers rising, USDA said, adding that this will give India the opportunity in expanding to additional markets, according to the USDA.

Russia has imposed an export quota and tax on its wheat exports from Feb. 15, while a floating tax will kick in from June 2, which could limit shipments going forward, according to analysts.

This could benefit India's wheat exports into countries like Bangladesh, which is a major buyer of Russian wheat, analysts said.

"Several years ago, when stocks in India reached burdensome levels, relatively high Russian export prices opened opportunities for India to supply not only Asian but also Middle East markets," USDA said.

Between April 2020 and December 2020, India has exported 976,083 mt of wheat, according to APEDA data. That is already higher than 217,010 mt shipped in the entire 2019-20 season.

However, USDA said India's wheat export volume may not match the levels seen in previous years, as a larger Australian crop will provide formidable competition in Southeast Asian markets.