India to allow wheat shipments awaiting customs clearance
The sudden ban and the confusion over wheat trapped at ports and in transit have thrown grains markets into disarray in states such as Madhya Pradesh, which was at the forefront of India's wheat exports, traders said. "Trading across Madhya Pradesh has stopped," said Gopaldas Agarwal, chief of a leading traders' association in the state.
India will allow overseas wheat shipments awaiting customs clearance, the government said on Tuesday, introducing some leeway for overseas sales after it banned exports of the staple on Saturday. India will also allow wheat exports to Egypt, the government said in a statement.
"It has been decided that wherever wheat consignments have been handed over to Customs for examination and have been registered into their (Customs) systems", either on May 13, 2022, or earlier, would be allowed to be shipped out, the government said. India banned wheat exports just days after it forecast record shipments of 10 million tonnes this year, as a scorching heatwave curtailed output, sending domestic prices to record highs.
The government said it would only allow exports backed by letters of credit, or payment guarantees, issued before May 13. The provision has created uncertainty, given that of some 2.2 million tonnes of wheat at ports or in transit, traders said they only had letters of credit for 400,000 tonnes.
The export ban also trapped about 1.8 million tonnes of grain at ports, potentially forcing traders to take heavy losses from selling onto a weaker domestic market. The sudden ban and the confusion over wheat trapped at ports and in transit have thrown grains markets into disarray in states such as Madhya Pradesh, which was at the forefront of India's wheat exports, traders said.
"Trading across Madhya Pradesh has stopped," said Gopaldas Agarwal, chief of a leading traders' association in the state. "Traders are not buying from farmers as they need to first sort out the cargoes stuck at ports." As a result, local wheat prices have dropped more than 4% since the ban was announced, he said.
Farmers across India said they have stopped selling wheat to traders due to the sudden drop in prices. Since the ban, trucks loaded with wheat have been waiting at ports, with both truckers and traders incurring losses, Agarwal said.
Small dealers and exporters who lack money to cover the losses or make payments will be hit the hardest, possibly triggering a chain of defaults, one Mumbai-based trader said. The trader, who declined to be named in line with his company's policy, said the government needed to immediately let the cargoes trapped at ports ship out to avoid losses to farmers, traders, and transport operators.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)