India has suddenly and unexpectedly imposed an export ban on wheat, causing wheat prices to rise sharply on Monday, May 16.
The futures quote of wheat delivered in September rose by almost €20 in Paris to around €435 per tonne.
Not so long ago, India raised its export expectations by 10 million tonnes. The country saw great opportunities now that export from Ukraine has become virtually impossible due to the Russian invasion. The Russians have blocked the Black Sea and thus the grain normally shipped through the Black Sea cannot leave Ukraine. Ukraine is now trying hard to export grain to the West by rail, but it is much more difficult to export this way. The export thus remains limited.
India has now put a stop to exports to limit domestic price increases. A heat wave seems putting an end to the high expectations for the coming harvest. Existing agreements on the extradition of wheat are being complied with. Egypt, for example, has just in time secured a quantity of 500,000 tonnes of wheat from India. To further cover Egypt’s needs, wheat from Australia, France and Kazakhstan is now also being looked at.
An initial forecast from the USDA Department of Agriculture for the wheat harvest in the 2022-2023 season assumes shrinking stocks. USDA believes stocks will decline, especially in India. The ministry based this on India’s statements that it wanted to become more active in the export market. This may have contributed to the fact that India wants to avoid a grain shortage with a quick export stop.
USDA expects to export 8.5 million tonnes of wheat from India in the 2022-2023 season. This amount is slightly larger than the export in the current season. By Indian standards these are large quantities, because in recent years hardly any wheat was exported. In the 2020-2021 season, 2.5 million tonnes of wheat were exported.
This makes India a small player on the world market, especially given the production that is estimated at 108.5 million tonnes in the new season. In comparison, the world’s largest exporter, Russia, produces 80 million tonnes according to the USDA forecast and is expected to export 39 million tonnes. According to the American estimate, the European Union will harvest 136.5 million tonnes of wheat in 2022 and will be able to export about 36 million tonnes of it.