India to Import Wheat as Stocks Remain Tight, While Exporting Ample Rice

India is a significant player in global food grain trade. It is the second largest producer of rice and third for wheat. Government policies have encouraged production of these two staple grains, which are forecast at record levels. Despite bumper crops, the country’s food grain trade is moving in opposite directions as the stocks situation diverges.

In response to diminishing wheat stocks, the government eliminated the import tariff on wheat in December. However, GOI reinstated the policy in March before the local harvest began. While India wheat production is up ten percent, it is not enough to meet growing food demand and replenish stocks after two poor harvests. As a result, India is forecast to be a net importer for the second consecutive year.

In contrast, the record rice crop is forecast to not only supply the domestic market but also the world as India remains the top global supplier. The rice stocks remain ample and still well above the desired buffer level, aiding Indian competitiveness. Meanwhile, second-largest exporter Thailand has held numerous auctions to reduce government-held stocks, recently pressuring their prices higher.

The relative availability of Indian food security stocks has been the key driver for food grain trading behavior. A decade ago as global food prices were escalating, the government banned exports of wheat and non-basmati rice. Stocks grew with expanding production. Exports resumed in 2011/12, and India became an exporter of both grains. Now as stock levels have diverged, India is a wheat buyer and rice seller.


For 2017/18, global production is lower this month as smaller projected crops for Australia, China, the EU, Ukraine, and the United States more than offset larger forecasts for Russia and Turkey. Global trade is down slightly this month. Exports are lowered for the EU, Ukraine and the United States, more than offsetting increases for Russia and Turkey. U.S. imports are projected higher based on shortages of high-protein milling wheat. The season-average farm price is projected $0.50 higher at $4.80 per bushel.

For 2016/17, global trade is up, highlighted by larger imports for Indonesia and reductions for the EU and Syria. Exports for the United States, Turkey, and Ukraine are revised higher this month. U.S. imports are raised marginally. The U.S. season-average farm price is down slightly at $3.89 per bushel.


US Wheat prices for June were up for all classes of wheat. Hard Red Winter (HRW) expanded $45/ton to $246, while Soft Red Winter (SRW) gained $34/ton to $212. Soft White Winter (SWW) climbed $19/ton to $204. Hard Red Spring (HRS) skyrocketed $81/ton to $343 on tightening supplies of high-protein wheat on concerns of dry conditions in the Northern Plains. HRS quotes are at their highest level since late 2014.

Russia Forecast to be World’s Leading Wheat Exporter for First Time

Russia is forecast to be the world’s leading exporter for 2017/18 for the first time, surpassing the EU and the United States. Russia’s total supplies are expected to be record-breaking based on near-record production as well as massive carry-in from the previous year. New-crop Russian wheat is competitively-priced against other origins - Australia, Ukraine, and the United States. Russia’s current position in the global market is a large change from a decade ago. Expanding area and improving yields have led to several consecutive bumper crops. In addition, export competiveness has improved with investments in infrastructure, specifically efforts to expand port capacity.

Russia’s abundant supplies and low prices in the current year provide an opportunity to compensate for tight supplies in other major exporting countries. Last year, the United States was the world’s largest exporter, aided by abundant supplies and competitive prices. This year, however, the U.S. crop is projected down significantly and exports are forecast lower, in spite of abundant carry-in. The EU is projected to have a better crop and larger exports compared to last year. However, supplies are still expected to be tight relative to the previous two years, when it was the leading exporter by a large margin.


Selected Importers

  • Iran is cut 300,000 tons to 1.2 million based on lower expected demand.
  • Syria is reduced 300,000 tons to 900,000 based on lower expectations for consumption in light of the ongoing conflict.
  • Turkey is lowered 400,000 tons to 5.4 million based on a larger expected crop.
  • United States is up 500,000 tons to 3.8 million on stronger demand for high-protein wheat as drought conditions diminish output for the spring wheat crop.

Selected Exporters

  • European Union is cut 500,000 tons to 30.0 million based on a reduced crop.
  • Paraguay is slashed 350,000 tons to 300,000 based on lower expected production.
  • Russia is raised 1.5 million tons to 30.5 million based on a larger crop and reduced competition from the EU, Ukraine, and United States.
  • Turkey is up 200,000 tons to 6.2 million as abundant domestic supplies are expected to encourage flour exports.
  • Ukraine is lowered 500,000 tons to 14.0 million based on a smaller crop.
  • United States is cut 1.0 million tons to 26.0 million based on reduced supplies of high-protein wheat.


Selected Importers- based on trade data

  • China is raised 200,000 tons to 4.4 million.
  • European Union is lowered 200,000 tons to 5.3 million.
  • Indonesia is up sharply 900,000 tons to 9.9 million based on larger-than-expected May imports.
  • Syria is down 200,000 tons to 800,000.

Selected Exporters- based on trade data

  • Pakistan is lowered 100,000 tons to 600,000.
  • Russia is raised 300,000 tons to 27.8 million.
  • Ukraine is up 200,000 tons to 18.0 million.
  • United States is raised 1.1 million tons to 29.3 million.