Wheat export ban- Traders staring at huge losses as mandi prices fall up to 8%

Wheat export ban: Traders staring at huge losses as mandi prices fall up to 8%

Mandi prices of wheat have declined 7-8% on Monday in Rajasthan, Gujarat and Delhi owing to the export ban announced on Friday.

In Chittorgarh mandi, Rajasthan, wheat prices have declined more than 8% to Rs 2,125 a quintal from Rs 2,325 a quintal on Friday. Similarly in Delhi, mandi prices have declined more than 7% to Rs 2,120 a quintal. “Traders who purchased wheat from farmers by paying Rs 150-200 a quintal more than the minimum support price of Rs 2,015/quintal for exports purpose will now have to release their stocks in the domestic market,” Mukesh Ghatod, a trader from Chittorgarh, Rajasthan said.

Wheat prices have declined around 8% since Friday in mandis across Gujarat. In Punjab and Haryana, where procurement operations have been largely completed, a few farmers sold wheat at around Rs 2,020 per quintal on Monday, just above the MSP.

Punjab mandis reported wheat arrivals of just 144 tonne on Sunday. “The decision to ban wheat export was timely and it would increase domestic availability of grain and prices would soften,’ Anjani Agarwal, president, Roller and Flour Millers Federation of India, said.

Trade sources said that at Kandla port, from where a bulk of wheat is being exported, there are around 5,000 trucks (25 to 30 tonne capacity each) waiting for the consignment to be unloaded.

According to a Mumbai-based exporter, huge losses will be incurred by those who have booked their consignment but yet to receive the letter of credit. “They will liquidate their stocks in the local market at much lower prices,” Kunal Shah, partner of Kunal Corporation, said.

The export ban has come at a time when traders have received orders for 4.5 million tonne (MT) and were looking at more deals in the short term, in keeping with an export target of 10 MT set by the government. The global wheat market is very volatile at present and prices remain elevated, owing to the shortage caused by the Russia-Ukraina war.

Of course, the ban won’t be applicable to two kinds of shipments — exports committed by the Indian government under bilateral understanding with a few countries to meet their food security needs and shipments under transitional arrangements, where irrevocable letters of credit have been issued prior to the ban.Meanwhile, Egypt on Sunday has approved import of 0.5 MT of wheat from India.

Government agencies have so far procured 18.03 MT of wheat from farmers, mostly in key growing states of Punjab, Haryana, Uttar Pradesh and Madhya Pradesh, till Sunday — a decline of 51% compared to the same period in the previous year. The government has announced extension of wheat procurement date for Punjab and Haryana to May 31 while purchase operations will be allowed in Uttar Pradesh and Madhya Pradesh till June 15. Out of around 1,700 procurement points in Punjab, 1,500 have been closed.