Wheat Report

Wheat, the second-largest food grain sown in India after rice, is planted during October-November and harvested in February-March in the country.  

Rabi Sowing and Production estimates:-

Area sown to wheat, the main rabi crop is down by 2.82 % at 343.26 lakh hectare so far in the ongoing 2021-22 rabi season, according to data released by Agriculture ministry in February-22. Wheat was sown in 346.10 lakh hectares in the year-ago same period. Normal sowing areas of wheat is 303.06 lakh hectares in India (The last three-year average). The seeded area under the wheat is increased sharply over the year in major states, such as Madhya Pradesh and Bihar, while remaining steady during the year in states, such as Punjab, Rajasthan, and Gujarat. The sown area declined in the current year in Uttar Pradesh and Haryana.

India's agriculture ministry is expecting the production of 111.2 million tonnes Vs. 109.24 mt of wheat last year, as per 2nd advance estimates of production of food grains for 2021-22 released by Ministry of Agriculture and Farmer Welfare on 16th Feb '22.

Wheat Stock:-

Government has wheat stocks of around 283 lakhs metric tonnes with the central pool at the end of this month. Stocks are almost 35 LMT is lower compared to last February '21. The Government of India has decided to keep Minimum Support Prices of Wheat @ Rs. 2015/quintal. To ensure sufficient stock centre has announced that it would buy 44.4 million tonnes (MT) of wheat during rabi marketing season 2022-23. Last year's total procurement was 43.34 million tonnes.

Wheat Exports:

Bid spike has been seen in the export of wheat in current financial year (Data in below chart considered till Dec' 21) as the major factors that supported the Indian wheat export numbers includes high MSPs, ample domestic supplies, tighter exportable supplies from competitors, and strong global demand, including from neighbouring countries. Harvesting season - 2021/22 was a bumper production year and burdensome government stocks for wheat were only partly offset by generous distributions through the public distribution system. Indian wheat exports are likely to rise to a record high of between 6.5 to 7 million tonnes (mt) this fiscal on the back of good demand for countries in South Asia and South-East Asia regions. The US Department of Agriculture expects India to ship around 6.50 million metric tonnes during MY 2021-22

     *Million Metric Tonnes, Source-APEDA

Global Market Overview:-

As per USDA, Global production is down this month primarily on reduced forecasts for Syria and Iraq. Global consumption is raised this month with more feed use in Canada. Ending stocks are revised slightly lower this month and are down more than 4 percent from the prior year. Global trade is forecast higher this month with increased imports for Iraq, Syria, Morocco, Indonesia, Kazakhstan, and the United Kingdom.

Global wheat prices for most major exporters were up slightly over the past month as geopolitical tension in the Black Sea region fuelled concerns about availability. Canadian quotes had the largest increase, rising $22/ton from the previous month. Australian quotes rose $5/ton as the new crop merchandising began with strong international demand, particularly from China and Indonesia. Argentine quotes rose $6/ton, supported by strong purchases from Brazil. U.S. quotes were also up $8/ton, tied to the deteriorating condition of the U.S. winter crop due to continued dry weather across much of the wheat growing regions. EU quotes were down $9/ton as Algeria shifted purchases to suppliers in the Black Sea region. Russian quotes were down $16/ton, as importers eye alternative suppliers in advance of the implementation of the export quota.

Ukraine Wheat Exports: Lowered Slightly this Month but on Track for a Record

Amid a bumper crop and competitive prices, Ukraine wheat exports are forecast at a record 24.0 million tons, with over 17.0 million exported between July and the end of January. Ukraine harvested a record crop of 33.0 million tons and has followed its typical pattern of strong exports in the first half of the year. Exports are usually brisk in the first few months given the limited storage infrastructure and the pressure to ship other grains, especially corn, later in the season. Ukraine directly competes with Russia in nearby markets such as Egypt and Turkey and has been very price competitive thus far. Ukraine has significantly expanded its wheat exports to Turkey in the first 5 months of the year and aims to deepen that trading relationship with the signing of a bilateral free trade agreement this month. Pakistan has been a recent global importer and has relied once again this year on price competitive Ukraine wheat.

WheatExport contributors:

Impacts of Current Russian Ukraine crisis on the wheat market:

- Russia and Ukraine contributes global exports of wheat around 37.26 and 18.05 million metric tonnes which accounts 18.5% and 9% respectively
- Globally Wheat Supply is expected to disturb, especially from the black sea region.
- As per current situations USA, EU, UK, Germany, Canada, Japan, and Australia may impose import restrictions for Russia.
- Russia-Ukraine wheat export demands are expected to shift to other producing countries, as it would be unable to supply the global needs of Wheat.
- Indian Wheat export may increase due to the ongoing crisis between Ukraine and Russia as no other origin new crop is coming during this time. 
- CBOT wheat Futures prices have shown a big spike of around 45% in the last five trading sessions with high volatility. Indian spot markets have also shown a spike of around 7% in the same time frame, in anticipation of supply chain disruption amid global demand.

Price trend

NBHC View:-The price of wheat is expected to remain bullish in the light of spurt in the export demand arising due to the current crisis, high procurement plan of Govt. and lesser carry overstock; both with the private and government sector. Domestic prices are expected to remain above the MSP @ Rs.2015/quintal.