Record 112mn tonnes Indian wheat harvest may not help global supplies
Indian government struggled last year to combat high domestic wheat prices and securing local food availability
India is heading for the highest wheat harvest on record of 112 million tonnes this spring. "However, exports will likely be limited in the coming year as the country is still recovering from last year’s poor harvest and is expected to focus on rebuilding its own wheat inventories,” says Filipe Gouveia, Shipping Analyst, BIMCO.
The Indian government struggled last year to combat high domestic wheat prices and securing local food availability, the analysis said. "A wheat export ban has been in place since May 2022 and three million tonnes of wheat were released from government inventories in January 2023. The government has stated that the ban will not be re-evaluated until this year’s harvest is complete and securing domestic demand will be prioritised."
Gouveia says: “Indian wheat inventories at the start of this spring’s harvest are estimated to end at 12.6 million tonnes, down 35.3 percent YoY and at a six-year low. Given inflation concerns, most of this year’s excess production will likely be used to replenish inventories. Based on current estimates, we therefore do not expect wheat shipments from India to recover significantly during the coming marketing year."
The production of wheat during 2021-22 (4th Advance Estimate) is estimated at 106.84 million tonnes as compared to 109.59 million tonnes during 2020-21 registering a slight dip of 2.75 million tonnes (2.5 percent), according to the latest official update.
"Further, the wheat production during the last two years is higher than the average (2016-17 to 2020-21) wheat production of 103.88 million tonnes in the country."
India is the second largest producer of wheat worldwide, exporting over 10 million tonnes during the 2021/22 marketing year, BIMCO said in its report. The Indian government had hoped to export up to 15 million tonnes during 2022-23 before drought drastically reduced harvest estimates.
Global wheat supplies have been strained since the start of the war in Ukraine. "During the past year, wheat exporters have tapped into their inventories to meet global demand. It is estimated that inventories will be down 3 percent by the end of the 2022/23 marketing year."
Market conditions will likely remain challenging, and the International Grains Council (IGC) estimates that global wheat production will fall by 1 percent to 788 million tonnes during 2023/24 and wheat inventories will deplete further, the report said.