India sells 500k mt to Egypt on state-to-state basis following export ban

16 May 2022 | Masha Belikova

India has reportedly sold 500,000 mt of wheat to Egypt, hot on the heals of Friday’s announcement of a ban on exports with immediate effect.

The Indian government banned commercial wheat exports late Friday while leaving open the possibility to make government-to-government deals.

Egyptian authorities have been in talks with India to exempt exports to Egypt from the ban, and the potential sale of half a million wheat was said to have been agreed, according to Egyptian supply minister Aly Moselhy quoted in the media.

At the same time, Ahmed El-Attar, head of the Central Administration of Plant Quarantine at Egypt’s agriculture ministry was quoted as saying Saturday that Indian wheat supplied to Egypt “fully complies with the required standards.”

Meanwhile, the first vessel of Indian wheat nominated for Egypt has not yet left the port, with trade sources familiar with the matter saying it is waiting for additional checks by the government on the opened letter of credit.

The Indian government has restricted the new private export sales of wheat, in expectation of a drop in production following a heatwave and to ensure domestic food security.

Global markets have reacted sharply to the news, with futures trading sharply higher on the CME and Euronext exchanges.

Demand for Indian wheat has been strong for almost all of the past year given its relatively cheap price, but it increased further when Russia invaded Ukraine, effectively blocking exports from the country.

Almost half of the amount potentially available for export from India has already been sold, with officials putting that level at 4.3 million mt versus a total target at 10 million mt expressed by the ministry of commerce.

India has also said that all existing deals with an already opened letter of credit would not be subject to the ban, along with trades on a governmental level.