MUMBAI: India’s wheat export ban has trapped some 1.8 million tonnes of grain at ports, leaving traders facing heavy losses from the prospect of selling onto a weaker domestic market, four dealers told Reuters. New Delhi banned wheat exports on Saturday, just days after saying it was targeting record shipments of 10 million tonnes this year, as a scorching heat wave curtailed output and domestic prices hit a record high.
Only exports backed by letters of credit (LCs), or payment guarantees, issued before May 13 can proceed before the ban takes effect, India has said. But of the around 2.2 million tonnes of wheat currently at ports or in transit there, traders have LCs for only 400,000 tonnes, a Mumbai-based dealer with a global trading firm said.
“Exporters don’t know what to do with the remaining 1.8 million tonnes. Nobody thought the government will outright ban the exports,” said one dealer, who declined to be named due to company policy. One Mumbai-based trader said the ban could force it to declare force majeure on shipments to overseas customers.
“We bought wheat from traders and moved it to ports,” the trader said. “Our intention is to fulfil export commitments, but we can’t overrule government policy. Therefore, we don’t have any option but to declare force majeure.” Global buyers were banking on supplies from the world’s second-biggest wheat producer after exports from the Black Sea region plunged following number one exporter Russia’s Feb. 24 invasion of Ukraine. Importers such as Bangladesh, Indonesia and United Arab Emirates may struggle to find alternative suppliers amid rising global prices.
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