India: Wheat exports ban review likely in March

The government will likely review a ban on wheat exports in March 2023 when it will have greater clarity on the harvest of the key winter-sown crop, official sources told FE.

With about a fortnight remaining for the winter sowing to be over, the area under the wheat crop has jumped 25% from a year before. This has prompted the government to expect a bumper wheat production in the current crop year through June 2023 if weather remains favourable, said the sources.

The wheat yield in the 2021-22 crop year was curtailed significantly by intense heatwave in March, which led to a fall in production from the expected level and the subsequent ban on the grain’s exports in May. Wheat output dropped 3% on year in 2021-22 to almost 107 million tonne, according to official estimates, but private traders pegged it below 100 million tonne (MT).

“A review of the wheat export ban could be done in March when the government will assess the demand-supply situation. So far, the production prospect looks encouraging but we will have to closely monitor the weather,” said an official.

While imposing the export ban in May, the Centre, however, allowed wheat despatches that were backed by letters of credit (LCs) issued prior to the ban, and also through government-to-government deals.

Official sources said the Centre has allowed wheat exports of 2.5 MT since the May ban, only about 2,00,000-250,000 tonne of which have taken place through government-to-government deals. After taking into accounts the despatches of 2.2 MT before the ban, wheat exports this fiscal stand at 4.7 MT, way below those of 7.2 MT in the entire FY22 when there was no prohibition.

The requests for government-to-government deals from other countries dropped after New Delhi allowed wheat exports against the earlier LCs, one of the sources said.

At the wholesale level, wheat inflation eased for a second straight month since August in the wake of the ban, but it still remained elevated at 16.25% in October. However, wheat inflation is expected to have dropped further in October.

Wheat stocks with the state-run Food Corporation of India (FCI) hit 19.03 MT as of December 1, lower than the buffer requirement of 20.52 MT for October 1 each year. However, they are higher than the requirement of 13.8 MT stipulated for January 1.

Tags: crop, yield, ban, March, exports, Production, wheat, India