An export ban on wheat from India has held up about 1.8 million tonnes of grain in ports, potentially causing big losses for traders who now have the prospect of selling domestically at lower prices, four traders told Reuters.
New Delhi banned wheat exports on Saturday, just days after saying it was targeting record shipments of 10 million tonnes this year. The announcement came after a heat wave cut output, pushing domestic prices to record highs.
The news pushed US-traded wheat futures prices to the daily limit of $0.70 cents a bushel on Monday, according to market information.
Only exports backed by letters of credit (LCs) issued before May 13 can proceed before the ban takes effect, India said.
But of about 2.2 million tonnes of wheat currently in ports or in transit there, traders have LCs for just 400,000 tonnes, said a Mumbai-based trader with a global trading company.
“Exporters don’t know what to do with the remaining 1.8 million tonnes. Nobody thought the government would ban exports,” said one trader, who declined to be named due to company policy.
A Mumbai-based trader said the ban could force him to declare force majeure on shipments to overseas customers.
“We buy wheat from traders and transfer it to ports,” the trader said. “Our intention is to fulfill our export commitments, but we cannot cancel the government’s policy. Therefore, we have no option but to declare force majeure.”
Global buyers were betting on supplies from the world’s second-largest wheat producer after supply disruptions from the Black Sea region with the war in Ukraine.
Importers such as Bangladesh, Indonesia and the United Arab Emirates may struggle to find alternative suppliers amid rising global prices.
A volume of around 1.4 million tonnes of wheat is currently in or transiting west coast ports like Mundra and Kandla, while around another 800,000 tonnes are in the east coast ports of Kakinada, Tuticorin and Visakhapatnam. according to operators.
Source: CNN Brasil
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