The United States Department of Agriculture (USDA) increased its estimated forecast of India’s wheat exports to 1.8 million tonnes for 2020-21 from 1 million tonnes.
According to a news agency, this export would be the highest India has ever exported in the last six years. The reason for the treble in India’s wheat exports is increasing international prices and low-interest money flowing into the agriculture-commodity markets.
Currently, the wheat future contracts for the month of March at the Chicago Board of Trade Exchange are at $244.35/tonne. This rate is 18.3% higher than what it was a year ago. In 2020 the wheat future contracts were at $206.59/tonne.
This increase in the rate increases the possibility for Indian wheat to be exported to other international markets, especially to Bangladesh. Bangladesh imports its wheat from Russia mostly. In its latest world grain trade report, USDA reported that Bangladesh “is beginning to shift its purchases towards India.” The total wheat import of Bangladesh is currently 66 lakh tonnes for the year 2020-21.
However, traders are of the belief that the rate of Indian wheat is still not at a competitive cost due to the government’s minimum support price (MSP) of Rs. 19,750/tonne. If one adds roughly Rs. 1,200 for the cost of cleaning, bagging and loading, the price increases to 20,955/tonne or $286/tonne. This price is higher than the $275/tonne that major exporters like Australia, France, the US, Russia quote.
This issue can be worked upon if the wheat is sourced at below the MSP rates from states where government procurement is lesser. These states include UP, Bihar, Gujarat & Maharashtra. The wheat from these markets is available at rates as low as Rs. 17,000/ tonne. The wheat bought from these places can be exported to Bangladesh via rail rakes.
The increase in the wheat export estimate is welcome news for the nation. India is already a major rice exporter and ranks among the 10 biggest exporters of agricultural products in the world. According to the World Trade Organization’s Trade Statistical Review for the year 2020, India’s share in the global agricultural exports increased from 1.1% in 2000 to 2.2% in 2017. The export share then decreased to 2.1% in 2019 being valued at $37 billion. Talking about another global giant, the USA saw a decline in its share from 13% in 2000 to 9.3% ($165 billion) in 2019.
The USDA’s report also estimates India’s rice imports to go to 14.4 tonnes from 9.79 tonnes in 2019 and 11.79 tonnes in the year before that. India’s neighbour Bangladesh imported 80,000 tonnes in 2020 is expected to import another 1 tonne this year from India.
The report added, “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.” Thailand and Vietnam both have seen their exports fall due to drought-reduced crops.