Quality concerns related to the fungal disease Karnal Bunt and overuse of pesticides have previously plagued wheat exports from India
Quality concerns related to the fungal disease Karnal Bunt and overuse of pesticides have previously plagued wheat exports from India
Indian wheat could present a cheaper option for top importer Egypt, but it has to overcome quality controls set by the country’s Ministry of Agriculture as well as higher freight costs.
Last week, Egypt’s agriculture ministry announced that it had approved India as the point of origin for wheat imports but imposed several conditions, including inspection for pests before export and use of only a specific pesticide, according to a ministry document provided to Reuters was asked.
“Just because we’ve approved origin doesn’t mean we accept anything. There are technical conditions set by the Plant Quarantine Department,” Ahmed El Attar, the head of the department, told Reuters.
Quality concerns related to the fungal disease Karnal Bunt and overuse of pesticides have previously plagued wheat exports from India, with some suppliers receiving complaints a few years ago. However, traders and government officials in India have said it has received no complaints as it exported large volumes to countries including Bangladesh, South Korea, Sri Lanka, Oman and Qatar among others this year.
Traders also said freight costs would pose a challenge for Indian suppliers, adding that the lowest freight costs stood at $70 a ton on Tuesday.
“The freight cost of India’s wheat to Egypt would be around $70 a ton, versus $30-40 a ton for shipments from the Black Sea region,” said Rajesh Paharia Jain, a leading trader from New Delhi.
India’s wheat exports hit 7.85 million tonnes in the fiscal year ended March, an all-time high and a sharp increase from 2.1 million tonnes a year earlier.
News of Egypt’s addition of India as an approved import origin country was welcomed by both countries. India is trying to capitalize on its manufacturing surplus and Egypt is looking for lower prices after Russia’s invasion of Ukraine halted its purchases, about 80% of which came from Russia and Ukraine last year.
Recent export deals from India have been signed for between US$330 and US$335 per tonne FOB, more than US$100 cheaper than European bids bought by state grain buyer General Authority for Supply Commodities (GASC) in its recent tender.
GASC had canceled two tenders since Russia’s invasion of Ukraine before its last purchase last week. One tender has yet to be made since approval and it is unclear if India will be included as a country of origin in its next tender book.
