India may allow up to 500,000 mt of wheat exports soon in second tranche since ban

The Indian government is likely to allow exports of nearly 500,000 mt of wheat in the near term after it banned shipments on May 13, officials in the Indian trade ministry told S&P Global Commodity Insights June 7.

The officials also said that this will be the second tranche of exports allowed since the ban was imposed. Recently, India cleared 469,000 mt of wheat exports, mainly to Bangladesh, the Philippines, Tanzania and Malaysia, they added.

The May 13 ban cut India's exports to 1.13 million mt in May, down 23% on month, against a record 1.46 million mt in April, an official with the food ministry said.

"The government is allowing exports that were stuck within the country despite having proper documentation and letters of credit issued before the restrictions came in," the food ministry official added.

There is still around 1.7 million mt of wheat stuck at several ports, including Mundra and Kandla, as exporters moved large volumes of wheat amid robust export demand and the likelihood of comfortable domestic supplies, dealers with two global export firms said.

However, Indian traders were anxious about future shipments after Turkey rejected a consignment of 56,877 mt of Indian durum wheat on phytosanitary concerns.

India, the world's second-largest wheat producer, emerged as a key wheat supplier in the backdrop of global supply tightness after Russia's invasion of Ukraine.

The government had earlier been optimistic about facilitating record wheat exports in marketing year 2022-23 (April-March), after India shipped out 7.85 million mt in MY 2021-22.

However, a severe heat wave across key wheat-producing northern states led to spike in domestic prices and prompted the government to ban exports to check rising prices and ensure food security.

The severe heat wave has also reduced India's wheat output projection for MY 2022-23 to 106.4 million mt from a record 111.4 million mt seen in February. The output in MY 2022-23 is seen nearly 3% lower year on year.

While banning the exports, the government had allowed exemptions to shipments that had letters of credit issued before May 13 or through government interventions to ensure food security in other countries.

Despite the decline in output and the restrictions on exports, Indian traders expect the authorities to allow up to 7.5 million mt of wheat exports in MY 2022-23.

Indian traders are also hopeful of the country striking a deal with Egypt to export wheat in exchange for fertilizers and other goods.

"India is in talks with Egypt to sign a deal to export wheat in exchange for fertilizers," another official with the trade ministry said.

Egypt, the world's largest wheat importer, is also facing food security threats amid rising wheat prices and is looking for ways to ease bread prices. This comes as India has been looking for cheap origins of nitrogen-based fertilizers, of which Egypt is a key producer and supplier.

As Indian wheat disappeared from the global market, export prices rose sharply. Platts assessed of Australian Prime White wheat prices at $452/mt June 6, up 1.6% day on day, according to S&P Global Commodity Insights data.