Lower India’s Wheat Production in 2022-23 Could Limit Exports

As global grain wheat supplies tighten due to the Russia-Ukraine war, India is becoming a vital wheat exporter in 2021-22. In MY 2021-22, India exported 7.85 million mt of wheat, 3.6 times more than in 2020-21. The ongoing geopolitical crisis in the Black Sea Region has added more significance to Indian wheat, as African and Middle East countries are trying to diversify the sources of their wheat purchases. However, the expectations of a 10% fall in wheat production in the country amid drought may set limits to export volumes in MY2022-23.

The 2021-22 season was successful for Indian grain exporters. Depleting global wheat stocks amid falling production in the leading exporting countries – Russia, the USA, and Canada – allowed the Indian wheat sector to strengthen its position on the world market. A surge in wheat exports was possible thanks to a record crop at 109.5 million mt in 2021, up 1 million mt from the previous record at 108.5 million mt. Bumper crops have secured the accumulation of ample grain stocks in governmental storage. Therefore, India has accumulated sufficient reserves, totaling 27.3 million at the beginning of the season, up 11.8% YoY.

Source: Indian Ministry of Commerce and Industry, traders estimates

Although the official data for March 2022 wheat trade have not been released yet, the difference between traders' final exports figure and governmental eleven-month wheat export numbers shows that India's wheat shipped 1.18 million mt of wheat in February 2022There has been a strong demand from the Middle East and African countries, as they were switching to Indian wheat to mitigate supply disruptions from the Black Sea Region.

In 2021-22, India exported more than 4 million mt of wheat to Bangladesh, representing 51% of the total shipments. Last season, the other two largest buyers of Indian wheat were Sri Lanka – 581,000 mt, representing 7.5% of total exports, and the UAE – 480,000 mt (6.1%). In 2022-23, it is expected that India's wheat exports will expand more to the west, with Middle East buyers expecting to boost imports significantly, should the Ukrainian-Russian tensions continue.

After numerous field checks and inspections, Egypt finally added India to the wheat supplier list in mid-April 2022, and 240,000 mt is expected to be delivered to Egypt in April. India projects that wheat supplies to Egypt could total 1 million mt throughout this season. The significant advantage of Indian wheat is its competitive export price, with milling wheat being USD30-40/mt lower than Ukrainian or Russian price offers. However, the delivery time and freight rates are double the values from the Black Sea area.

India's government sets the wheat export target of 10 million mt for 2022-23, up 3 million from 2021-22. However, recent concerns about possible lower crops amid heat last month affecting yields in Uttar Pradesh, Haryana, and Punjab could cap the export potential. Wheat production might fall by 10% YoY to 100 million mt in 2022-23. With April’s wheat stocks at 19 million mt, the total supply would make up 119 million mt in the current season. Annual consumption totals 105 million mt. Therefore, 14 million mt will be available for exports. However, according to the strategic wheat buffer norms, the required domestic stocks must stay at 7.5 million mt. If production falls to 100 million mt, exports could be at 6.5 million mt.

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