Indian traders have sewn up deals to export half a million tonnes of wheat in recent days. And dealers are expected to sign more contracts to take advantage of record-high global prices, boosting shipments from the world’s No.2 producer of the staple.
Russia’s invasion of Ukraine has fanned fears over supply disruptions from the Black Sea region, which accounts for 30% of global wheat exports. That has sent global wheat prices to a 14-year high this week.
CAN INDIA EMERGE AS A MAJOR EXPORTER OF WHEAT?
India is the only major global supplier of wheat at this point, thanks to massive surplus stocks at home. The rally in global prices and a record slump in the Indian rupee against the dollar also make shipments attractive to Indian sellers.
Indian warehouses are brimming after five consecutive record harvests – largely a result of favourable weather. The introduction of high-yielding seed varieties and state-set support prices for growers.
Harvests will again scale new peaks in 2022. With farmers set to harvest 111.32 million tonnes from next month, up from the previous year’s 109.59 million.
WHY HASN’T INDIA EXPORTED MORE OF ITS HUGE SURPLUS BEFORE?
Bulging wheat stocks helped the government cushion the blow from droughts in 2014 and 2015. And enabled Prime Minister Narendra Modi’s administration to distribute free grain during coronavirus lockdowns.
But economists say maintaining such a large, unproductive inventory of unnecessarily strains stretched state finances. And the monoculture also saps the soil of nutrients.
India has struggled to export wheat due to the annual increase in support or guaranteed prices offered by the government to growers. That increase made Indian wheat more expensive than world prices, making overseas sales uneconomic for.
Indian traders and government officials also cite an increase in cargo handling capacity at Indian ports as another help.