India’s wheat export ban pushes Australian FOB price to record high
About 1.7-1.8 million tonnes of wheat stuck in Indian ports
Firms meet India’s Commerce Ministry to seek relaxations
Wheat in Indonesia, flour prices rise
India’s wheat export ban announced on May 13 to ensure sufficient availability of wheat in domestic markets pushed Australian wheat prices to a record high on May 17.
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Amid uncertainty surrounding Indian exports, S&P Global Commodity Insights valuations for Western Australia’s APW hit a record high of $458/mt on May 17, rallying $18/mt on the day , while ASW closed at $426/mt, up $16/mt on the day. .
Following the ban, wheat and flour prices in Indonesia rose, sources said.
An Indonesian flour mill raised prices by about 2% to Rs 171,000/25kg bags, but “the price increase is out of step [with the current market] and [was] scheduled two weeks ago,” a source said. Flour prices will have to be raised further due to the current Indian ban, an Indonesia-based source added.
At least one Indonesian buyer received force majeure notices but declined to be named.
No inquiries have been reported by buyers to cover Indian wheat purchases as the situation is still fluid and several market participants are hopeful that shipments will not be halted, sources said.
Meanwhile, Australian wheat could be bought to cover these shorts, but prices have soared on the news from India.
South Australia FOB offers were first reported at $485/tonne for July-August shipments at the start of the day, but by the end of the day on May 17 the offers were lowered to $455/ton.
The July SRW wheat futures contract on the Chicago Board of Trade — which settled on May 16 up 70 cents a bushel on the day, the maximum gain allowed in a trading session — fell eased during Asian trading hours on May 17 and was around 18 cents lower at 5:30 p.m. Singapore time (09:30 GMT).
Watch India move
Market participants were weighing the impact of India’s ban on wheat markets, and opinions on the outlook were wide-ranging, according to a survey by S&P Global Commodity Insights.
Contracts with letters of credit issued on or before May 13 are permitted for exports, under the notification.
Several wheat farmers in India are appealing for exports to resume and for clarification on the ban, a source familiar with the matter said.
A host of trading companies had a meeting with Commerce Ministry Piyush Goyal on May 17 to seek relaxations for shipments already contracted, another source said. After the meeting, the Indian government changed some rules to allow shipments that reached the customs department to be inspected and examined no later than May 13.
However, trade participants estimated that around 1.7 to 1.8 million tonnes of wheat remained stuck in various ports.
“Wheat is stuck in port storage facilities and on trucks…wheat is also out in the open at port complexes because it is expensive to rent storage and transport space,” said one Mumbai-based trader.
If the wheat is left out in the open, it can eventually lead to lower grain weight, a trader said.
Market participants estimate shipments of around 4.5 million tonnes of wheat have been contracted, according to a survey by S&P Global.