Though suspension of wheat imports from the US by Japan and South Korea is likely to offer opportunities to other nations exporting the foodgrain, India is unlikely to gain much from the development.
During the weekend, Japan, the second largest wheat importer in Asia after Indonesia, and South Korea suspended wheat purchases from the US after a non-approved genetically modified wheat was found growing on a farm in Oregon.
The US is nowhere nearer to finding how this happened, though the Department of Agriculture officials said that a probe was on to see how the wheat which has a gene altered to make it resistant to herbicides reared its head. The US has allowed cultivation of various genetically-modified crops such as corn, soyabean, cotton and alfa-alfa grass but not wheat.
As an immediate reaction to the finding of the wheat, prices on the Chicago Board of Trade dropped. However, prices in the other origins such as Europe gained.
“Prices of Europe, Australian and even Black Sea region wheat have gained. But this is likely to be a short-term gain. Once the US comes out with the result of its probe, things could change,” said Tejinder Narang, a consultant with a wheat export firm.
“Impact on Indian wheat is likely to be minimal since it is treated more as a feed wheat abroad, where the US wheat is a soft one for milling,” he said.
This also means India, which is trying to export more wheat from its warehouses, may not find a buyer in Japan or South Korea in the short-term.
“It will be hard for India to meet Japan’s specifications. They also need a more clean wheat which goes against the Indian grain.
“Though facilities for cleaning wheat have come up at places such as Adani port, they are yet to be accepted,” said Pramod Kumar, Director of Sunil Agro Mills in Karnataka.
“Maybe, Korea could accept our wheat,” he said.
“Even Korea considers Indian wheat for feed purpose only,” said Narang.
“It is not easy for Indian wheat to gain in markets where the look for high-protein produce which the US will be able to deliver. Japan mills have specifications for their products and we won’t be able to meet them,” said M.K. Dattaraj, former president of the Roller Flour Mills Federation of India.
India is looking to export wheat to cut its warehouse stocks. As on May 1, the Food Corporation of India held 11.7 million tonnes of wheat as stocks.
This is almost thrice the norms fixed by the Centre for buffer stocks that help meet any food emergency in the country.
In April, the Government gave its approval to export three million tonnes of wheat but there have been a few buyers for Indian wheat abroad.
This is because India is looking for a price of $300 a tonne that is much higher than the prevailing prices in the global market.
The Government appeared a bit desperate to export wheat since it has estimated the current year’s crop at 93.9 million tonnes.
“Some Indian wheat has been sold at $280 a tonne c&f for delivery in August. This is against $265 quoted for Black Sea region wheat,” said Narang.
Indian wheat is finding its way through West Asian and North African markets. Still, prices are considered high.
Though Indian wheat can be cleaned and efforts could be made for its acceptance for milling by mills abroad, the cost is seenprohibitive.
“There will be at least 2-3 per cent wastage when Indian wheat is cleaned.
This could mean a loss of $10 a tonne. Even if $7 a tonne premium is given for clean wheat, it will still be a loss proposition,” he said.
“Australia will be able to supply the quality that Japan requires,” said Pramod Kumar.
“Canada can also supply quality wheat to Japan. But all these could be short-term developments only,” Dattaraj said.
Wheat prices at the New Delhi Lawrence market, a benchmark for the country, increased to Rs 1,590 a quintal on Saturday.
On the National Commodities and Derivatives Exchange, wheat for delivery in July closed at Rs 1,624.
On the Chicago Board of Trade, wheat July contracts quoted at $7.05 a bushel or $259 a tonne.