As major exporter prices rise, India wheat exports are returning to the global market in a sizeable way for the first time in several years. India’s ample supplies are poised to reach additional markets as stocks tighten among many of the top exporters.
India’s domestic support programs have a history of periodically expanding wheat production and burgeoning government-held stocks. In addition to supporting production, India also subsidizes domestic consumption, supplying most of its population with heavily discounted grain rations. This year, wheat consumption has risen sharply with additional allocations of wheat through programs intended to address the economic challenges stemming from the COVID-19 pandemic. Yet even with record consumption, stocks remain at record levels, primarily held in government grain reserves.
Several years ago, when stocks in India reached burdensome levels, relatively high Russian export prices opened opportunities for India to supply not only Asian but also Middle East markets. However, since 2016/17, the high domestic support prices have been reflected in high export prices, limiting India exports to primarily neighboring countries.
In recent months, Indian export prices have eased while prices for major suppliers have risen. Russia’s announcement of both a grain export quota and a 50 euro/ton wheat export tax sent quotes for that top exporter and other suppliers rising. This will afford India the opportunity to seize greater market share in Bangladesh and expand to additional markets. However, the scale of exports from India is not likely to match that of several years ago, since a larger Australian crop will provide formidable competition in Southeast Asian markets.