Trade sources cast doubt on Russia-India wheat flows

Trade sources have cast doubt on reports that India could allow the import of up to 9 million mt of Russian wheat via a state-to-state deal, amid concerns that the country's import infrastructure could struggle to cope with such volume.

However, despite another huge crop itself, India is battling food inflation and a pick up in imports is expected - the question is just how much. 

Trade sources in India have told Agricensus that such a large volume would be impossible to consider being imported under a state-to-state deal, but conceded that total imports - both private and state - could reach that level.

The prospect of increased imports has been on the radar for some time already amid firming domestic wheat prices and the government failing to reach its minimum procurement level - leaving stocks well below usually expected levels.

The biggest annual volume of wheat India has imported in the last ten years was 3.97 million mt back in 2017, according to government customs’ data, and the sources spoken to by Agricensus have expressed doubts that in general it would be possible for India to handle such a volume through its current state and private ports.

If such a figure was to be achieved it would propel India into the top tier of Russia's biggest buyers, landing between Turkey and Egypt – with 12.6 million mt and 8 million mt of annual imports respectively.

Such a sharp increase is another reason why traders see the figure as unlikely, with such a substantial volume likely to have a major impact on the domestic market and potentially alienate Indian farmers. 

Meanwhile, domestic prices have again started to firm after the relief brought about by the government's ban on rice exports leading to renewed talk about a possible reduction in the import duty.

Fresh rumors are focussing on expectations that the current 40% import duty could be halved in the coming months.

“There are recommendations already sent by FCI (Food Corporation of India) and concerned bodies to concerned ministries to reduce import duty from 40% to 15% or 20%,” Rajesh Paharia from Commodity Traders Delhi told Agricensus.

While that measure is expected to cover any private import trade, Paharia expected the cut to have been implemented by the end of August or early September.

Among the other measures that are expected to be deployed to regulate the domestic market, trade sources was said that more volume could be released from the government stocks through an Open Market Sale Share (OMSS), likely to be held in October and November.

The first talks about the possibility of India importing wheat started to appear back in January 2023, as the slow progress of government stock-builing procurement efforts became apparent while domestic prices pushed higher.