Four dealers told Reuters that India’s wheat export ban has stuck around 1.8 million tonnes of grain at ports, leaving traders facing huge losses from the prospect of selling in a weak domestic market.
New Delhi on Saturday banned wheat exports, days after it said it was targeting a record shipment of 10 million tonnes this year as scorching heat hit production and record domestic prices. Height reached.
India has said that only export restrictions backed by letters of credit (LCs), or payment guarantees issued before May 13, can go ahead before they take effect.
But with around 2.2 million tonnes of wheat currently at ports or in transit there, traders have LCs for only 400,000 tonnes, said a Mumbai-based dealer of a global trading firm.
“The exporters don’t know what to do with the remaining 1.8 million tonnes. No one thought that the government would impose a ban on direct exports,” said a dealer.
A Mumbai-based trader said the ban may force him to declare force majeure on shipments to foreign customers.
“We bought wheat from traders and took it to the ports,” said the trader. “Our intention is to meet the export commitments, but we cannot revoke the government policy. Therefore, we have no option but to declare a force majeure event.”
Global buyers were banking on supplies from the world’s second-largest wheat producer after declining exports from the Black Sea region fell after Russia’s February 24 invasion of Ukraine fell the number one exporter.
Importers such as Bangladesh, Indonesia and the United Arab Emirates may struggle to find alternative suppliers amid rising global prices.
The sudden ban would make it difficult for exporters to profitably sell the shares lying at the ports.
They may have to resell those cargoes in a weak domestic market, which has been under fresh price pressure since news of the export ban, said a New Delhi-based trader with a global trading firm, and reload them. and transportation cost.
Dealers said around 1.4 million tonnes of wheat is currently stuck in transit at or near west coast ports like Mundra and Kandla, while around 800,000 tonnes is at Kakinada, Tuticorin and Visakhapatnam ports.
“The loading of ships has stopped at some ports. Thousands of trucks are waiting to unload at the ports without any clarity,” the trader said.
An exporter said those affected by the ban included global trading houses, as in some transactions their Indian subsidiaries sold wheat to their regional headquarters in Singapore before securing the required LCs.
A New Delhi-based dealer with a global trading house said strong export demand and a belief that the government will support shipments of at least 8 million-10 million tonnes, allow exporters to take goods to ports after procuring them from farmers. encouraged to leave.
The dealer said every trading house wanted to ship as many as possible before the end of June, as the movement of the crop becomes difficult once the monsoon rains begin.
“The commerce ministry and even the state governments were helping the exporters. Exports were profitable, so we never thought the government would do something like this,” he said.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.