Chronicle of raw materials

Wheat exports: India's false leap pushes prices up

Audio 01:44

The last two good harvests of 2020 and 2021 have given wings to New Delhi, which has increased its exports significantly, half of which, however, last year was destined for one buyer, Bangladesh.

© Anindito Mukherjee/REUTERS

By: Marie-Pierre Olphand Follow

2 mins

After promising to export more wheat this year to relieve the international market, India retracted this weekend.

A decision that caused prices to jump.

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India is a marginal player in the wheat trade, because most of its production – the country is the world's second largest producer – is consumed internally.

But the last two good harvests of 2020 and 2021 have given wings to New Delhi, which has increased its exports significantly, half of which, however, last year was destined for one buyer, Bangladesh.

For this year, with an initially planned harvest of more than 110 million tonnes of wheat, the country first thought of putting 7 million tonnes on the international market, then 10, to compensate for the lack of Ukrainian wheat.

But the drought got the better of Indian largesse.

India has revised its production estimates downwards - 105 million - as prices have started to soar on the local market - 20 to 40% more for wheat and flour.

As a result, the country did an about-face and suspended its exports, an announcement much criticized by G7 agriculture ministers.

And although this decision is temporary and subject to review, the market is so tight that it reacted immediately.

Faced with uncertainties, wheat hits new records

Wheat opened yesterday at 435 euros on the Euronext Commodities Exchange, " 

 ", according to an expert from Agritel.

In three months, wheat took 40%.

India's decision comes in an unfavorable context: the southern United States, in particular the winter wheat production areas, and western Europe are short of water.

In France, the leading exporter of wheat in the European Union, groundwater has been undernourished and a drop in yield is already expected.

On the Maghreb side, Morocco is expecting one of the lowest harvests in its history, again due to the drought affecting the Mediterranean basin.

World production could fall for the first time in 4 years, world stocks are expected to fall to their lowest in six years over the period 2022/2023, according to the latest report from the United States Department of Agriculture.

Russian wheat exports to watch

The Indian decision adds a layer of complexity to cereal markets, summarizes Sebastien Abis, expert in agricultural and food geopolitics.

It puts a little more pressure on Russian grain exports.

Production looks pretty good, but it's hard to say what volume of wheat Moscow will be able to export in the current context.

In the absence of reassuring elements, the supply of wheat and its cost will remain the question of the coming months for all the countries which have calls for tenders in progress or to come.

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