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Informist, Wednesday, Apr. 22, 2026

By Afra Abubacker and Shreya Shetty

NEW DELHI – The Centre's decision to allow additional wheat exports has drawn a mixed response from the market. Most participants are questioning its relevance even as the earlier quota remains unutilised due to lack of export price parity, but some said the move would be beneficial if geopolitical and climatic conditions improve export competitiveness.

 

Notably, the decision to allow higher exports in a year marked by adverse weather conditions and sluggish pace of procurement suggests the government's confidence in its ample buffer stocks to cushion any supply shortfall in the domestic market.

 

On Monday, the Centre raised the wheat export quota to 5.0 million tonnes, aiming to support farmers and prevent distress sales during peak arrival season. In February, the government reopened wheat exports after a nearly four-year ban and announced an export quota of 2.5 million tonnes, citing ample stocks in the central pool.

 

As of Apr. 1, wheat stocks in the central pool were up 85% on year at 21.8 million tonnes, which is well above the buffer norm of 7.5 million tonnes for the current quarter.

 

While allowing more exports, the government cited higher acreage and expectation of a record production of 120.2 million tonnes in the 2025-26 (Jul-Jun) crop year, along with ample availability of stock.

 

However, market participants said the policy is anchored in estimates that no longer reflect ground realities. "The government is allowing extra exports on the basis of a crop estimate released on Mar. 10, and the (export) decision is taken after 40 days. That is ridiculous. The estimate does not reflect the present ground realities," said Sandeep Bansal, an Uttar Pradesh-based miller.

 

Crop conditions have deteriorated across key producing states such as Rajasthan, Haryana, and Punjab, where unseasonal rainfall in March has led to quality issues such as loss of lustre, a higher proportion of shrivelled grains, and increased moisture levels. In Madhya Pradesh, higher temperatures have affected grain filling and delayed crop maturing, raising concerns over yields.

 

"Wheat production may fall by 5 million-6 million tonnes from last year," G.K. Sood, an agricultural expert, said. "Between existing stocks and the new crop, there is sufficient availability to meet the domestic demand," he added. India produced 117.9 million tonnes of wheat in 2024-25, and 113.3 million tonnes in the previous year, according to the government's final estimates.

 

Though the market is still assessing the extent of crop losses, the government's relaxation of quality norms for wheat procurement suggests that the scale of damage may be significant. In addition, the government's wheat purchases are down nearly 16% on year at 11.43 million tonnes as of Monday, according to official data. Delayed harvesting and lower arrivals from farmers are affecting procurement. The government aims to procure 30.3 million tonnes by the end of June in the 2026-27 rabi marketing season.

 

However, some traders interpreted the higher export quota as a signal that the government may not be that keen to aggressively procure this year. "They don't have enough storage, and there is a shortage of gunny bags too. The government is trying to increase wheat prices by encouraging demand for exports. If spot market prices increase beyond the MSP (minimum support price), then farmers will be less interested in selling to the government," a trader from Indore, said.

 

Many of India's farm commodities are not competitive globally due to the minimum support price mechanism set by the government.

 

EXPORT PARITY

According to industry players, exporters have not shipped any wheat out of the country under the 2.5-million-tonne export quota announced in February. Although licences have been issued for the entire quota, exporters are struggling to secure contracts due to strong competition.

 

Indian wheat is priced $265-$270 per tonne free-on-board, compared with $230-$240 per tonne from major exporters such as Russia, Ukraine, and the European Union.

 

However, Sood said export parity need not drive policy decisions. "The government is not in the business of switching exports on or off based on parity. That is the role of trade," he said, adding that parity may emerge given the geopolitical and climatic conditions.

 

He cited the case of sugar, where exports picked up after initially lacking parity. "Exports have picked up. So far, about 600,000 tonnes sugar have been shipped out," Sood said.

 

Asked about the chances of Indian wheat becoming export competitive, Sood said, "You never know. There is a war going on. Because of El Nino, Southern Hemisphere wheat crops in Australia and Argentina can be adversely impacted. A weaker rupee can also improve parity," he said. If parity emerges, export opportunities will likely open up primarily in East Asia, followed by West Asia, Sood said.

 

El Nino may pose risks to India's kharif crops such as paddy and sugarcane, but not wheat as it is only grown in the rabi season. Sood avoided speculating on the effect of El Nino on next year's crop "as it is extremely premature at the current juncture." The India Meteorological Department has this year forecast below-normal rainfall during the southwest monsoon that runs from June to September as El Nino conditions are likely to prevail in the second half of the season from August.

 

Wheat prices have fallen below the MSP of INR 2,585 per 100 kg in many markets, as minimum rates are at INR 2,150 in Madhya Pradesh, INR 2,190 in Rajasthan, and INR 2,260 in Uttar Pradesh, according to official data. Prices have fallen mainly due to rising arrivals, weak demand, and quality concerns.

 

Demand has been sluggish in the past few weeks amid ample supply, including carry-over stocks with large buyers such as fast-moving consumer goods companies, stockists, and traders.

 

Asked if the higher export quota will support wheat prices, Bansal said it would only "sentimentally support farmers and sellers" unless shipments pick up. "The higher export quota is just to create a fresh narrative that this is a farmer-oriented government and that they are helping them out," he added.  End

 

US$1 = INR 93.84

 

Edited by Ashish Shirke

 

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