First rice, now wheat: India rides on world grain commerce bandwagon

After rice, India is ready to show a serious exporter of wheat as effectively – because of surging worldwide costs from Chinese stockpiling and ultra-low rate of interest cash more and more discovering its means into agri-commodity markets.
The US Department of Agriculture (USDA) on Tuesday upped its forecast of Indian wheat exports for 2020-21 (July-June) to 1.8 million tonnes (mt), as towards its earlier estimate of 1 mt. That could be the best ever within the final six years (see chart).
The trebling of shipments this yr is especially on the again of rising world costs. Wheat future contracts for March supply on the Chicago Board of Trade change are at the moment at $244.35 per tonne, 18.3% larger than the $206.59 a yr in the past. This opens up potentialities for Indian exports to close by markets, particularly Bangladesh that buys principally from Russia.

With the Russia authorities levying a 25 euros-per-tonne export tax on wheat efficient from February 15 – in response to excessive home costs – Bangladesh “is beginning to shift its purchases towards India”, the USDA has famous in its newest world grain commerce report. Bangladesh’s whole wheat imports are positioned at 6.6 mt in 2020-21.
Traders, nevertheless, imagine that Indian wheat remains to be not aggressive on the authorities’s minimal help value (MSP) of Rs 19,750 per tonne. The export value of wheat purchased in Gujarat at that price – after including roughly Rs 1,200 in direction of value of cleansing, bagging, loading and transport to Kandla or Mundra port – could be Rs 20,950 per tonne.
That works out to $286 per tonne or $290-plus, after including exporter margins.

The above value is larger than the $275-280 that main exporters corresponding to Australia, France, US, Russia and Canada are quoting for March-April shipments. Indian grain, furthermore, fetches a $10-15/tonne low cost relative to Australian premium white and Russian wheat having extra protein content material (12.5% versus 11.5%) and fewer overseas matter/impurities.
“In all, given our MSP, we are $25 or so per tonne costlier today,” stated Amit Takkar, managing director, Conifer Commodities Pvt. Ltd.

That drawback can, in fact, be overcome if wheat is sourced at beneath MSP from Uttar Pradesh, Bihar, Gujarat and Maharashtra, the place not a lot authorities procurement occurs. The new crop arriving in these markets from March onwards could be accessible at Rs 17,000-18,000/tonne. This wheat will be exported by rail rakes to Bangladesh or shipped to the Middle East (UAE, Oman and Bahrain) and Southeast Asia (Indonesia, Vietnam and Malaysia).
The USDA report, in the meantime, has additionally estimated India’s rice imports to have hit a report 14.4 mt in 2020, up from 9.79 mt and 11.791 mt of the previous two years. The nation’s closest rivals – Thailand and Vietnam – have seen their exports throughout this era fall from 11.056 mt to 7.562 mt and 5.5 mt and from 6.59 mt to six.581 mt and 6.1 mt, respectively. Both have had drought-reduced crops, with Vietnam lately even contracting 70,000 tonnes of Indian rice for the primary time, following China in December.

USDA has projected India’s rice imports in 2021 at 14 mt. Bangladesh, which imported simply 80,000 tonnes in 2020, is anticipated to purchase one mt this yr. The beneficiary of it should once more be India. “Despite concerns about the availability of shipping containers, which is impacting rice exports from Vietnam and Thailand, India can export to Bangladesh via rail and truck,” the report added.
All this export demand isn’t unhealthy at a time when India’s personal home manufacturing of rice and wheat touched an all-time-high of 118.43 mt and 107.59 mt, respectively, in 2019-20. Government companies additionally procured a report 52 mt of rice and 38.99 mt of wheat. This yr, too, related bumper crops are doubtless.

The key driver of worldwide value turnaround appears to be China. USDA knowledge has forecast report Chinese imports of oilseeds (primarily soyabean) and coarse grain (maize and sorghum) in 2020-21 (October-September), aside from end-year shares of rice and wheat. The causes for its constructing strategic stockpiles of the whole lot aren’t as totally clear as their impact on worldwide costs.