India is now a major wheat exporter |
Thanks to surging international prices from Chinese stockpiling and ultra-low interest rate money increasingly finding its way into Agri-commodity markets, India is set to turn a major exporter of wheat. The US Department of Agriculture - USDA on 12th January upped its forecast of Indian wheat exports for 2020-21 (July-June) to 1.8 million tonnes (mt), as against its earlier estimate of one mt. It would be the highest ever in the last six years. Wheat future contracts for March delivery at the Chicago Board of Trade exchange are currently at $244.35 per tonne, 18.3% higher than the $206.59 a year ago. This opens up possibilities for Indian exports to nearby markets, especially Bangladesh that buys mostly from Russia. With the Russian government levying a 25 euros-per-tonne export tax on wheat effective from February 15, Bangladesh is beginning to shift its purchases towards India. Bangladesh`s total wheat imports are placed at 6.6 mt in 2020-21. Traders, however, believe that Indian wheat is still not competitive at the government`s minimum support price of $270 per tonne. The export price of wheat bought in Gujarat at that rate – after adding roughly the cost of cleaning, bagging, loading and transport to Kandla or Mundra port - works out to $286 per tonne or $290-plus, after adding exporter margins. The above price is higher than the $275-280 that major exporters such as Australia, France, the US, Russia and Canada are quoting for March-April shipments.
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