July 28, 2022
Wheat prices in India increase to record high despite export ban
Wheat prices in India have increased to a record high despite an export ban, due to rising demand and low supply from a crop damaged by heatwave, Reuters reported.
The likelihood that India will supply significant quantities of wheat under government-to-government agreements with nations struggling to secure shipments amidst the disruption of the war in Ukraine has decreased as a result of the price rally.
Gopaldas Agarwal, a trader based at Indore in central India, said the majority of farmers have sold their harvest. Despite strong demand, there are very few supplies available for sale.
Local wheat costs spiked to a record INR 23,547 (~US$295.23; INR 1 = US$0.13) per tonne. From recent lows that followed the government's unexpected export ban on May 14, that was up nearly 12%.
According to a Mumbai-based dealer with a multinational trading company, supplies in the grain markets were significantly lower this year than usual, indicating that production for 2022 had decreased significantly more than the government had estimated.
The estimate of 106.41 million tonnes made by the government may not be true. Based on current supplies, production could be around 95 million tonnes, the dealer said.
Production has been estimated at 99 million tonnes by the Foreign Agricultural Service of the US Department of Agriculture.
In 2021, India, the second-largest producer of wheat in the world, harvested 109.59 million tonnes. Due to a heatwave in March and April, the government predicted lower output this year.
Government wheat purchases, at 18.8 million tonnes so far this year, are 57% less than they were at the same time in 2021, another indicator of lower supplies.
A dealer with a multinational trading company based in New Delhi, said the government won't have much stockpile to intervene in the market until March 2023, when the new season's supplies become available.
The dealer said supplies are getting scarcer, adding that large shipments are unlikely under government-to-government agreements, but India may permit exports of a small quantity to Sri Lanka or Nepal.
India said it would permit international shipments to nations that requested supplies to meet their food security needs when it banned wheat exports.
In the second quarter, India exported 3.5 million tonnes of wheat, up from 1.1 million tonnes a year earlier, primarily to Bangladesh, Nepal, Indonesia, the Philippines, and Sri Lanka.