By Naveen Thukral
SINGAPORE (Reuters) – India’s wheat imports have slowed in recent weeks as good quality domestic crops have hit the market, leaving traders saddled with unsold stockpiles in port silos.
Wheat inventories at ports have climbed to a record high of about 1.8 million tonnes, mainly cargoes shipped from Australia and the Black Sea region, trade and industry sources said.
“Flour mills are not keen to take imported wheat as they prefer local wheat which is good quality this year,” said a trader who has been actively supplying the commodity to India. “It is a headache for traders who shipped cargoes anticipating strong demand.”
Unsold wheat at Indian ports highlights the plight faced by global grains trading companies amid a global supply glut.
Bumper crops have flooded many markets, dragging on prices for grains and hitting profits at agribusiness giants including Cargill, Bunge Ltd <BG.N>, Archer Daniels Midland <ADM.N> and Louis Dreyfus Co.
Global corn, wheat and soybean inventories have risen for four straight years in the longest stretch of increases since the late 1990s, according to U.S. government data.
World grain and oilseed stocks are up 48 percent since 2012/13, compared with production growth of 18 percent and consumption growth of 17 percent over the same period.
India, however, the world’s second-biggest wheat producer, has suffered a supply shortfall after two years of lower production.
Importers shipped in close to 5 million tonnes of wheat in the 10-months to end-April, the most in a decade.
But in March, the country imposed a 10 percent import tax on the grain to curb imports at a time when Indian farmers were starting to harvest their crops.
“Imports have slowed down, or we can say imports have nearly come to a halt, because of the strong harvest and lower prices in most parts of the country,” said R. K. Garg, managing director of R. R. Flour Mills and former president of the Roller Flour Millers Association of India.
“Those who had import commitments have suffered losses due to a fall in prices here.”
The state-run Food Corporation of India, the main grain procurement agency, has so far bought 27.1 million tonnes of new season wheat from farmers compared with last year’s total of 23.0 million tonnes, Food Minister Ram Vilas Paswan said last week.
“The offtake of imported wheat is very slow,” said the second trader. “We might see demand for imported wheat later this year or early next year.”
For the year to June 2018, traders expect India’s demand for imported wheat to slow, but it will still need to buy about 2-3 million tonnes as local supplies dwindle towards the end of the year. It will take a few years of bumper production to rebuild stocks to comfortable levels, they say.
(Reporting by Naveen Thukral; Additional reporting by Mayank Bhardwaj in NEW DELHI; Editing by Richard Pullin)