Ukraine crisis: Govt looking to tap diplomatic missions to export wheat

India is looking to tap its diplomatic missions abroad to enable grain exporters in the country to ship out wheat and corn as supplies from Russia and Ukraine are expected to remain disrupted for some time to come.

Between the two items, pushing for wheat is easier because of a huge domestic surplus.

“We are hand holding our exporters and support from various Indian missions abroad is also being channelised accordingly,” a senior government official said.

Global wheat prices have jumped since the Ukraine crisis started, with wheat futures in the US reaching their highest levels since 2008. Indian wheat is comparable in quality, taste, and texture to Russian Red Sea wheat, which makes the country an ideal replacement for the commodity from Ukraine and Russia.

“Anywhere across the world where milling wheat is required, India can fill the gap because our prices are highly competitive,” a senior official of a leading global trading firm said.

Some reports say Lebanon is looking to buy Indian wheat while some Southeast Asian countries placed orders for around 400,000 tonnes after the crisis broke out.

Trade sources said the till a few days back, a far-month contract for Ukrainian wheat was quoting at $295-320 per tonne (FOB) in world markets, while Argentinian wheat was quoting at $318-321 per tonne (FOB) and French wheat at $320-338 per tonne.

At the same time Indian wheat is quoting at $315-320 per tonne (FOB).

However, since then prices have even further both globally and also for Indian wheat and are not quoting at somewhere around $330-$340 per tonne

“Ramzan is just round the corner and most of the West Asian countries such as Lebanon, and Egypt (in Africa) depend on Russian and Ukrainian wheat to meet their demand and if India can replace them it could help in clearing some of the domestic inventories,” the trade official quoted above said.

India can use the opportunity to liquidate a portion of its huge wheat stocks in state-run inventories, which as on February 16 were estimated to be around 25.93 million tonnes, 248 per cent more than the quantity required to be stored as on April 1.

Russia is the world’s top wheat exporter and largest producer after China and India while Ukraine is among the top five wheat exporters worldwide.

The next big wheat crop from both the warring countries is expected to hit the world markets around June and trade sources said India was perhaps among the best-suited to exploit this because apart from bulging stocks, the harvest was expected to record over 111 million tonnes of fresh wheat in 2022-23 marketing year, which will start in April.

“There is a disruption in the global wheat export scenario. We are working with various countries. There is a disruption in the meat and animal products supply chain too. The Agriculture and Processed Food Products Export Development Authority (APEDA) is assessing the situation and suitable interventions for this will be done with all stakeholders,” M Angamuthu, chairman, APEDA, told Business Standard.

Corn

Ukraine is one of the major exporters of corn, but trade sources said, given the relatively small nature of the surplus from India, it would be difficult to claim a big chunk of that trade. But rising freight rates do provide hope to India to export corn to Southeast Asian countries.

“Freight rates from Argentina to Japan till a few days back were around $70 per tonne while from India they comparatively small, given its geographical proximity,” another trader of a global trading firm said.

India exported around 3.6 million tonnes of corn between January and December 2021, as against 2 million tonnes during the same period last year. Trade sources said till a few days back Indian corn was quoting at $293-300 (FOB) per tonne in international markets while Argentinian corn was selling at $305 (FOB) and US corn at $304 (FOB).