India likely to clear up to 1 mil mt wheat exports under allowed exemptions

India is likely to allow wheat exports of up to 1 million mt within the next few days as part of exemptions to its ban on wheat shipments, multiple officials from the country's Ministry of Commerce and Industry told S&P Global Commodity Insights May 27.

India banned wheat exports on May 13 amid rising domestic inflation and a fall in output. The government had reduced the wheat output estimates for marketing year 2022-23 (April-May) by 5 million mt on May 19 from 111.4 million mt projected in February. The revised output would be around 3% lower on the year.

In its notification announcing the export ban, the government had also exempted shipments under contracts where letters of credit were issued on or before May 13. The soon-to-be-announced clearance for shipments is expected under this exemption, they added.

"Around half of the shipments are to go to Bangladesh largely by railways and roadways," an official with the trade ministry added.

The Directorate General of Foreign Trade has been scrutinizing the letters of credit opened on or before May 13, the official said. It was alleged that many firms had opened back-dated letters of credit to be eligible for the shipment exemptions. However, the directorate general has streamlined the contracts to be approved by the trade ministry.

"The DGFT has sought approval for around 1 million mt wheat of exports in this phase against genuine letters of credit," an official with a multi-national grains trading firm said.

Since India banned wheat exports, it has allowed four shipments with 250,000 mt to Bangladesh, Oman, Brazil, and Indonesia.

Indian exporters were expected to ship around 7.5 million mt under the provided relaxations in MY 2022-23. However, India's exports in MY 2022-23 are now seen to be limited to around 6 million mt, a Mumbai-based exporter said.

For MY 2022-23, India has already exported nearly 3 million mt wheat over April-May, a government official said.

India had exported a record 7.85 million mt wheat in MY 2021-22, over three times the 2.1 million mt shipped the year before.

India had emerged as a key exporter of wheat amid globally tight supplies. Australia is now seen as a stable supplier of wheat in the Asia Pacific region since India imposed a ban.

However, with the ban on exports Australian wheat prices have increased sharply. According to Platts assessments, Australian Premium White wheat prices rose 7% since May 12 to $448/mt on May 27. Australian Standard White wheat prices rose nearly 9% since May 12 to $425/mt on May 27, S&P Global data showed.