Currently, wheat prices (all costs included) in the West Asian markets are 30-40% higher than the local minimum support price (MSP), at $360-370/ton. Prices are even higher at $410/ton in African markets such as Egypt, Lebanon, Libya and Syria.

India’s wheat exporters look forward to a bonanza from the war between Russia and Ukraine as grain prices in key markets around the world have skyrocketed amid sharply reduced supplies from the war-ravaged region and could be expected to remain somewhat elevated until FY23. Since India could have an exportable surplus of 11-12 million tons of wheat after meeting the requirements of the National Food Security Act, it could be possible that the country could make nearly $5 billion from global staple foods in the coming years. years to export to many countries. financial year.

To put that into perspective, India’s wheat exports in FY23 could potentially be 2.5 times the current all-time high in value and nearly 9 times the shipments in FY21 (see chart).

Indian wheat could be particularly competitive in the West Asian and North African markets, while Bangladesh and Sri Lanka in the immediate vicinity could also buy large supplies of the country’s grain if supplies last longer.

Of course, to take full advantage of the higher export potential, policy makers will need to loosen stocks regulation and the governments of Punjab and Haryana will have to cut hefty mandi taxes. Madhya Pradesh, the largest wheat producer in the Indian states, and Gujarat will certainly benefit from the changed dynamics in the global grain markets.

Sudhanshu Pandey, secretary in the food and public distribution division, told FE that India would seize the opportunity created by the war between Russia and Ukraine to quickly scale up wheat exports. He said the country could easily export 11 million tons of wheat in FY23 given its massive production and inventories, adding that farmers would benefit from the higher shipments as much as traders.

India has been the world’s largest rice exporter for the past decade — export revenues hit a record $8.7 billion in FY21 and could exceed this fiscal $9 billion ($7.7 billion netted in April-January). But the country was a relatively fringe player in the global wheat trade until FY21.

According to official sources, the government has tightened its export strategy in a series of inter-ministerial meetings in recent days. It is expected that Russia and Ukraine, which have traditionally held a combined share of more than a quarter of the global wheat trade, will remain conspicuously absent from key markets for several months.

While current wheat stocks at Food Corporation of India (FCI) are now about three times the buffer standard and continued rabi sourcing will support stocks, the government may still need to guard against the possibility of large merchants forming cartels in an export market. overdrive, according to Siraj Hussain, former agricultural secretary. He recalled the occurrence of cartels by some traders in 2004, which caused the country’s wheat stocks to fall below buffer levels.

Currently, wheat prices (all costs included) in the West Asian markets are 30-40% higher than the local minimum support price (MSP), at $360-370/ton. Prices are even higher at $410/ton in African markets such as Egypt, Lebanon, Libya and Syria.

While export prices include freight and trade margins, they are currently much more rewarding for Indian farmers. Reflecting how much wheat trade shifted to sellers after the crisis in Ukraine, the hard red winter (HRW) variety, the most common variety of wheat grown in the US, registered at $539 per tonne, a 90% increase on yearly on March 7. analysts predict that prices in major markets will hover around $380-420/ton in the coming months.

“We expect export growth to continue in the coming months and farmers to realize much better prices than the MSP announced by the government,” said Kunal Shah, co-director of Shah Corporation, a wheat trading company based in Vashi, Mumbai.

Aside from the ports of Kandla and Mudra that were traditionally used by wheat exporters, the ports of Kolkata and Visakhapatnam are now likely to be used for exports to Southeast Asia and Bangladesh, the trade source said.

“We have regularly addressed the issues raised by exporters in the wheat export supply chain, especially in terms of compliance with standards prescribed by importing countries,” said M Angamuthu, chairman of the Export Development Authority for Agriculture. and processed foods.

Official sources said that as wheat prices are likely to rise above the MSP in the coming months, government agencies like FCI will end up buying just 35 tons of grain in the 2022-23 rabi marketing session, against the 44 tons target. The purchasing season will start from April 1.

“The supply of grains for the public distribution system under the NFSA will also not be affected (by higher exports) as stocks at the FCI are very high. At the beginning of this month, FCI was saddled with grain stocks of 23.4 tons, much higher than the buffer standard of 7.46 tons,” said an official source.

In Punjab and Haryana, FCI and government agencies buy most of the state’s wheat crop. State-by-state procurement targets for the coming season are Punjab (13.2 MT), Haryana (8.5 MT), Uttar Pradesh (6 MT) and Bihar (1 MT).

This post Russia-Ukraine War Effect: Wheat Exporters Reap $5 Billion Windfall

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