Russia could become leading supplier of wheat to India - Rusagrotrans

MOSCOW. April 8 (Interfax) - Because of the current potential of the 2024 harvest, high reserves and competitive prices, Russia will be able to become a leading supplier of wheat to India, the Rusagrotrans analytical center said following an analysis of the Indian grain market in recent years.

"If the wheat harvest in India this season [which lasts from March to February] ends up at the average level of about 105 million tonnes, taking into account depletion and the need to replenish previously record reserves, the country, seven years after our last exports in the 2017/2018 agricultural season, may move towards opening the market this season for more significant imports of wheat of up to several million tonnes," Rusagrotrans told Interfax.

The current season's crop in India is under threat due to the El Nino effect, which led to a lack of moisture during the grain-filling period, the center's analysts said. "Immediately before the harvest in March, there were showers and hail in the main wheat-producing states, which increased losses. The government has already asked private traders not to purchase wheat from farmers so that the Food Corporation of India can replenish reserves and purchase a minimum of 30 million tonnes, targeting the level of 34.2 million tonnes. The pace of purchases is currently ahead of last year's, when only 26.2 million tonnes were purchased from the 2023 harvest," Rusagrotrans said.

Official wheat stocks in India, according to Food Corporation data, fell to a seven-year low of 9.7 million tonnes in March 2024 (11.7 million tonnes in March 2022) due to low harvests in 2022 and 2023 and record sales of 9 million tonnes from June 2023 through the end of the 2023/2024 agricultural season.

The last time grain from Russia arrived in India was in the 2016/2017 agricultural year in the amount of 156,000 tonnes and then in 2017/2018, when the country received 258,000 tonnes, Rusagrotrans said. This happened amid a sharp decline in crop yields in India due to drought in the 2015/2016 and 2016/2017 seasons from 93 million to 86.5 million tonnes in 2015/2016 and from 96 million to 87 million tonnes in 2016/2017. As a result, imports in the 2016/2017 season soared to 6 million tonnes.

Wheat production in India then grew to 108 million tonnes in the 2020/2021 season and 110 million tonnes in the next season. This allowed the country to accumulate record stocks, place some in reserve, and begin exports, which reached 7.6 million tonnes in the 2021/2022 season. A prohibitive duty of 40% was introduced on wheat imports.

The situation changed in the 2022/2023 season, when official data show that the wheat harvest was 107.7 million tonnes, but prices and declining stocks were evidence that, due to severe drought in the spring of 2022, the harvest was likely to be significantly lower.

In October 2022, the import of wheat was partially allowed, but only low protein (9%) and only for processing into Atta flour, a whole meal flour for the production of flatbreads and export to other countries. This wheat is supplied from Australia.

Subsequently, reports appeared on the market about plans to reduce the duty on wheat imports from 40% to 15-20%, but they were officially denied.