India may double wheat export quotas due to record stocks

India is considering a significant increase in wheat export quotas, from the current 2.5 million tonnes of grain and 500,000 tonnes of processed products to potentially double the level. The reason is a significant increase in domestic stocks, which significantly exceed regulatory buffers, Platts sources say.

According to the Food Corporation of India, wheat stocks as of March amounted to 23.6 million tonnes, which is 71% higher than the norm and 76% more than a year ago. At the same time, the government continues to hold significant amounts of grain, which increases the cost of storing and maintaining stocks.

Despite the potential expansion of quotas, traders note that this does not guarantee an increase in exports. Indian wheat remains more expensive than alternatives from the Black Sea region and South America, which limits its demand on the global market.

Bangladesh is considered the main potential market, importing around 6.7-7.2 million tonnes of wheat annually. However, even there, Indian wheat competes only in certain segments due to price and logistics, while other Southeast Asian markets remain of little interest.

An additional constraint to exports is the quality requirements of importers. Processors in Vietnam and Indonesia note that Indian wheat is inferior in terms of quality stability and loses in terms of price to supplies from Australia, South America and the Black Sea region.

At the same time, market participants expect that after the start of the new harvest, prices for Indian wheat may decrease. An additional factor supporting exports may be government incentives, in particular possible subsidies for exporters, which will make the products more competitive on the world market.

Tags: export, wheat, India, restrictions