Typically, India is neither a significant importer nor exporter of wheat. This makes it easy to forget that India is the third largest producer (after China and the EU) and fights with the EU to be the second-largest consumer of wheat.
India is also a country where gauging crop production results is difficult. There are “official” numbers and then, somewhere in the fog, is reality. In 2022-23, with the Russian invasion of Ukraine creating significant global food security concerns, India’s government proclaimed that they would step up and help “feed the world” via increased exports.
What happened? Neil Townsend, Chief Analyst at FarmLink summed it up this way “Indian wheat production ran into problems. Excessive heat during the filling stage curbed yield. The data does not reflect this but everything else did: rising prices, higher imports of other crops grown in the same time frame, and no tangible movement to export beyond their typical markets.”
Indeed, the USDA still has the 2022 crop estimated at 104 million tonnes. The Indian government has a similar estimate. However, various analysts and local indications suggest the crop fell short of 100 million tonnes. Prices showed strength throughout the harvest period and stayed relatively high throughout the remainder of the 2022-23 marketing year.
The USDA has India in for 5.3 million tonnes of exports. The majority of this would be going to Bangladesh, Nepal, and Myanmar. This number is not as easy to discern as most export numbers because the overwhelming majority is shipped overland. Imports were negligible in 2022-23.
Turning our attention to 2023-24, the first fact is that Indian carry-in stocks of wheat are projected at a multi-year low of only 9.5 million tonnes. For 2022-23, This represents an 8.7% stocks-to-use ratio. The five-year average is indicated at 20.5%.
Production in 2023 was also hampered by warmer-than-average temperatures. The USDA and the Indian government have estimated a record outcome. The USDA has it at 113.5 MMT. Once again local estimates and global analysts looking at India suggest that the crop was 5 to 10% below the “official” number.
Indian wheat prices strengthened through harvest. The Indian government has taken steps to dampen prices by attempting to limit tendencies towards hoarding and releasing government stockpiles into key geographies. The USDA has reduced exports to only 1 million tonnes (again only going to immediately adjacent countries like Bangladesh).
What about imports? The USDA has a token 100,000 tonnes forecast. However, there are many other analysts who see the potential for a more significant import program. As always, the next crop matters in India. The kharif cropping season (wheat is grown during the rabi season) is underway and even though it is not a wheat-growing sequence, the outcome matters for overall Indian food security. If prices of staples continue to show strength, India could very well import 3 to 8 million tonnes of wheat.
Townsend added “India has developed strong trade relations with Russia since the Russian invasion of Ukraine. They have been active buyers of Russian oil. If they need wheat, Russia is an obvious source. Time will tell, but India is closer to importing a significant amount of wheat for the first time since 2016-17.”
Such a program would have material implications for the world wheat market.
