CORRECTION: World's third biggest wheat producer imports Australian APW

A handy-sized parcel of Australian premium white wheat (APW) was said to have been traded into India - the world's third largest wheat producer - and is expected to be re-exported to Bangladesh and other Asian destinations, trade sources have told Agricensus Thursday.

The Indian conglomerate ITC was said to be the buyer, paying around $414/mt CFR India for wheat with shipment between February 1-15 from Australia.

Traders suggested that the wheat could be intended to be processed and re-exported as flour, as regular wheat imports into India typically attract a 40% import tax. 

Also, trade sources said that there had been other enquiries from buyers looking for Australian wheat to import into India recently, but warned that it was unlikely to be a big outlet for a huge Australian crop. 

At the same time, market sources also expressed concerns about the price level, given that current FOB Australia levels for February loading ASW 9% are at $325-330/mt and APW at around $355-360/mt FOB. 

Only on Wednesday, Australian feed wheat was heard traded into Thailand for the February-March period at $343/mt CFR, while freight levels for eastern Indian ports might not be that different to freight levels for wheat into Thailand. 

“$414/mt CFR is like $50/mt higher than a replacement from Australia today, ASW is also not really the quality India would look for,” one trader told Agricensus, commenting in the unusual nature of the rumoured trade.

Meanwhile, the domestic price for Indian milling wheat was said to be around INR27,000, which is equivalent to around $325/mt.

India is the third-largest wheat producer in the world and was aiming to become a significant wheat exporter in the region after increasing its exports to a record 10.5 million mt in the 2020/21 marketing year, amid a freight and price advantage.

However, the plan failed in the 2021/22 marketing year, after worries over the final size of the crop and amid Russia's invasion of Ukraine forced wheat prices higher, leading to a ban on exports back in April. 

As the war unfolded, Ukraine and the Black Sea region was considered too risky for many buyers to deal with, forcing many to switch to India and causing significant demand to push domestic prices higher as exporters competed sharply with the domestic market. 

Moreover, domestic market prices have remained firm in India even after the ban was implemented, and trade sources said that the only possible way to lower prices for the government is to release its stocks.

However, at the same time, stock levels were said to be the lowest in the last 6 years, as the government was not able to compete with exporters by the time the purchases were done and were unable to build sufficient reserves to control prices. 

Correction: the article and the headline were corrected as updated information said that it was APW wheat bought instead of ASW