India is the second largest wheat producer in the world. That is why it is important to monitor its export performance.
With a population of 1.4 billion, India is also one of the largest consumers of wheat. The moment Russian troops invaded Ukraine, world prices of this commodity skyrocketed. Indian farmers and export companies wanted to take advantage of this and started exporting more, hoping for more profits.
However, higher exports, coupled with a poorer harvest due to a large increase in temperature in March, threatened the domestic market and threatened a shortage of wheat. The Indian government, therefore, reacted by banning wheat exports from the country.
This significantly affected the flour trade
When wheat could not be exported, the market demand for wheat flour increased significantly due to uncertainty. As a result, flour exports increased by 200% over 2021 for the period from April to June 2022. This has led to a ban on wheat flour exports.
Thereafter, the accumulated wheat was at risk of being devalued due to the threat of heavy monsoon rains and so exports of part of the wheat stocks were allowed, which helped to stabilize wheat supplies to neighboring countries somewhat.
We have seen that India has to be careful with its commodities this year in the case of rice. India has experienced below-average monsoon rainfall, which has caused limitations on rice cultivation. This has necessitated a significant reduction in rice exports.
Now comes positive news for the food market
India is now allowing processors to import wheat duty-free, against a commitment to export flour. The move was taken by the government following demands from food processors to allow the supply of value-added products.
This will help ensure greater food security in the neediest countries mainly in Asia and Africa. At the same time, the move will lift the supply of wheat flour in the market, which could help bring down prices in the world.