Wheat markets could be getting a demand bump in 2022-23, says an analyst.* Tight global rice supplies could result in changing trade patterns in the Indian Subcontinent. On Sept. 9, India imposed a ban on exports of broken rice and a 20 percent export tariff on paddy, brown and white rice with an exception to basmati and parboiled rice. These are the first restrictions that the country imposed since 2011.
India’s policy changes caused the United States Department of Agriculture to slash India’s 2022-23 export estimate by two million tonnes to 20 million tonnes*. Also, neighbouring countries like Bangladesh has been forced to source rice from Vietnam and Burma. Similarly, Nepal and Sri Lanka are going to be affected as well. Owing to the curbs imposed by the Indian government on exports of rice and United States Department of Agriculture (USDA) forecasts of smaller crops for China and Pakistan, the world may see a first reduction in global rice production since 2015-16.
Other Market Players Filling The Void
The trajectory of India’s 2022 crop has been interesting to follow. In February, there were talks of plentiful rain and reports of India backfilling the world with wheat exports. However, a month later the country was banning Wheat Exports, which was soon followed by restrictions on wheat flour exports. Now the country has imposed restrictions on exports of rice.
All this led to criticism from different countries around the world. At a meeting last week in Geneva, Senegal, the U.S. and the European Union raised questions over this decision, stating it could have adverse implications on global markets. However, India clarified that the ban on export of broken rice, follows a rise in the grain’s exports in recent months which had put pressure on the domestic market and in the case of wheat, food security concerns necessitated export curbs.
Interestingly, India was not a major exporter of wheat before. It has become a sizable exporter of the commodity in recent years, shipping 10.6 million tonnes of wheat in 2021-22. However, owing to the curbs imposed and India’s stance on exports of wheat, the USDA is forecasting a steep decline to four million tonnes in 2022-23.
Bangladesh, which has been a top importer of Indian wheat, won’t be able to import the same quantity of the commodity now. This means that Bangladesh will have to import the commodity from elsewhere.
Pakistan will also need to import more wheat because of flooding in the country.
All this means a huge potential for wheat exporting nations in general and wheat exporters around the world in particular, to tap newer markets and grow their business.
At a time when prices of agri-commodities in the global market are at a record high and the disruptions in the supply chain have become quite frequent, it is obvious that India’s decision to curb rice exports will leave a noticeable impact. In the global market, an empty space is bound to be filled, be it for a commodity or a supplier. Here, with the curbs imposed on Rice Exports, the demand for wheat by different nations around the world may see a rise.
Source*: Mint, *USDA