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India’s surprising wheat export ban will trap 1.8 million tonnes of wheat at ports-of-trade

MUMBAI: India’s wheat Export ban has ensnared 1.8 million tons of grain ports and traders face massive losses as a result of selling to an even weaker Domestic market , four dealers told Reuters.
New Delhi banned wheat exports on Saturday, just a few days after announcing record-breaking volumes that would exceed 10 million tons this year because a scorching heat wave cut production, and prices for domestic goods have risen to record levels.

Only exports that are backed with the letters of credit (LCs) or payment guarantee, which were issued prior to May 13 may continue to be conducted before the ban comes into in effect. India says in its statement.

However, of the 2.2 millon tonnes of grain in the ports, or currently in transit traders have LCs on just 400,000 tonnes, according to a Mumbai-based trader with global trade company said.
“Exporters don’t know what to do with the remaining 1.8 million tonnes. Nobody thought the government will outright ban the exports,” said one trader, who refused to reveal his name due to the company’s policy.

A Mumbai-based businessman told the trader that the ban could lead them to issue a force majeure notice for shipments to customers in other countries.

“We bought wheat from traders and moved it to ports,” the trader told the reporter. “Our goal is to fulfill Export obligations, however we aren’t able to change the policy of the government. We are forced for us to announce”force majeure.”

Global buyers were betting on the supply of the second largest producer of wheat in the world following the fact that exports out of in the Black Sea region plunged following number one exporter Russia’s february. 24-day invasion into Ukraine.

Importers like Bangladesh, Indonesia and United Arab Emirates could have a difficult time finding alternative suppliers in light of rising global prices.

The ban’s abruptness will make it more difficult for exporters to offer their stock in ports at a profit.
They could have to sell these cargoes to the weaker market in the domestic market that has been subject to new pressures since the news of an export ban came out in New Delhi, a trader from a global company for trading stated. They will also be required to cover reloading and transportation costs.

About 1.4 million tonnes of the grain is trapped at ports on the west coast like Mundra or Kandla or moving there, while about 800,000 tonnes of wheat is in the Kakinada, Tuticorin and Visakhapatnam ports along East Coast, traders claimed.

“Vessel loading has stopped at a few ports. Thousands of trucks are waiting to unload at ports without any clarity,” the trader added.

Global trading companies are among the companies affected by the ban since in certain transactions their Indian subsidiaries traded grain to the regional office in Singapore prior to securing the required LCs according to an exporter.

A strong demand for exports and the expectation of the possibility that government will help the shipment of at least 8 million to 10 million tonnes, prompted exporters to ship their cargoes to ports following purchase from the farmers according to a dealer in New Delhi who works for an international trading house.
Every trading company would like to move as many as they could before the end of June, since the movement of crops becomes more difficult after the monsoon rains begin to increase The dealer stated.

“The Commerce Ministry as well as state government were aiding exporters. Exports were lucrative, therefore we didn’t think that the government could do this,” he said.

MUMBAI: India’s wheat Export ban has ensnared 1.8 million tons of grain ports and traders face massive losses as a result of selling to an even weaker Domestic market , four dealers told Reuters.
New Delhi banned wheat exports on Saturday, just a few days after announcing record-breaking volumes that would exceed 10 million tons this year because a scorching heat wave cut production, and prices for domestic goods have risen to record levels.

Only exports that are backed with the letters of credit (LCs) or payment guarantee, which were issued prior to May 13 may continue to be conducted before the ban comes into in effect. India says in its statement.

However, of the 2.2 millon tonnes of grain in the ports, or currently in transit traders have LCs on just 400,000 tonnes, according to a Mumbai-based trader with global trade company said.
“Exporters don’t know what to do with the remaining 1.8 million tonnes. Nobody thought the government will outright ban the exports,” said one trader, who refused to reveal his name due to the company’s policy.

A Mumbai-based businessman told the trader that the ban could lead them to issue a force majeure notice for shipments to customers in other countries.

“We bought wheat from traders and moved it to ports,” the trader told the reporter. “Our goal is to fulfill Export obligations, however we aren’t able to change the policy of the government. We are forced for us to announce”force majeure.”

Global buyers were betting on the supply of the second largest producer of wheat in the world following the fact that exports out of in the Black Sea region plunged following number one exporter Russia’s February. 24-day invasion into Ukraine.

Importers like Bangladesh, Indonesia and United Arab Emirates could have a difficult time finding alternative suppliers in light of rising global prices.
The ban’s abruptness will make it more difficult for exporters to offer their stock in ports at a profit.
They could have to sell these cargoes to the weaker market in the domestic market that has been subject to new pressures since the news of an export ban came out in New Delhi, a trader from a global company for trading stated. They will also be required to cover reloading and transportation costs.

About 1.4 million tonnes of the grain is trapped at ports on the west coast like Mundra or Kandla or moving there, while about 800,000 tonnes of wheat is in the Kakinada, Tuticorin and Visakhapatnam ports along East Coast, traders claimed.

“Vessel loading has stopped at a few ports. Thousands of trucks are waiting to unload at ports without any clarity,” the trader added.

Global trading companies are among the companies affected by the ban since in certain transactions their Indian subsidiaries traded grain to the regional office in Singapore prior to securing the required LCs according to an exporter.

A strong demand for exports and the expectation of the possibility that government will help the shipment of at least 8 million to 10 million tonnes, prompted exporters to ship their cargoes to ports following purchase from the farmers according to a dealer in New Delhi who works for an international trading house.
Every trading company would like to move as many as they could before the end of June, since the movement of crops becomes more difficult after the monsoon rains begin to increase The dealer stated.

“The Commerce Ministry as well as state government were aiding exporters. Exports were lucrative, therefore we didn’t think that the government could do this,” he said.

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