India’s wheat export restriction had held 1.8 million tonnes of grain at ports. Leaving traders facing hefty losses from the prospect of selling onto a weaker domestic market. 4 dealers informed Reuters exclusively.
As a scorching heat wave curtailed output and domestic prices hit a record high. New Delhi banned wheat exports on Saturday. Just days after saying it was targeting record shipments of 10 million tonnes this year.
India has stated that only exports backed by letters of credit (LCs). Or payment guarantees issued before May 13 will be allowed to proceed before the ban takes effect.
However, traders have LCs for only 400,000 tonnes of the 2.2 million tonnes of wheat currently at ports or in transit, according to a Mumbai-based dealer with a global trading firm who informed Reuters.
Abrupt Ban Hurt Indian Exporters
The sudden ban will also make it more difficult for exporters to profitably sell stocks sitting at ports.
According to a New Delhi-based trader who told Reuters. With a global trading firm, they may have to resell those cargoes into the weaker domestic market. Which has been under renewed price pressure since the export ban news broke. And will also have to pay reloading and transportation costs.
Around 1.4 million tonnes of wheat is currently delayed or in transit at west coast ports like Mundra and Kandla, while another 800,000 tonnes is in east coast ports like Kakinada, Tuticorin, and Visakhapatnam, according to merchants.
According to an exporter, global trading houses are among those affected by the ban because their Indian subsidiaries sold wheat to their regional headquarters in Singapore before obtaining the necessary LCs in some transactions.