Global Economy

Will BJP win? This market awaits June 4 results for potential shakeups in India's trade policies & global food prices

Agricultural markets are on watch for potential shakeups in India’s trade policies after a new government assumes office this month, which could have significant ramifications on global food prices.The fifth-biggest economy has kept key crops like sugar and some major rice varieties off the global markets for more than a year. Prime Minister Narendra Modi sought to ensure adequate domestic supplies and temper consumer costs ahead of national elections, walking back a pledge to “feed the world” in the wake of Russia’s invasion of Ukraine. It also refrained from cutting a tax on wheat imports to appease farmers, a large voting bloc.

Prices of some farm commodities have softened from their peaks, with state agencies also cracking down on hoarding and selling some grains from state reserves. That raises the chance of a shift in the restrictions after election results are announced on June 4.

A spokesperson representing both the food and commerce ministries didn’t immediately comment.


Any relaxation in overseas sales could ease Asian benchmark rice prices that are trading near a 15-year high and add to a downturn in sugar. However, a rally in Chicago wheat could be further stoked if the administration accepts the industry’s demand of cutting import levies to boost local supplies.

The nation has banned shipments of broken and white rice, besides imposing a 20% tax on the parboiled variety. The move, which has squeezed global supplies and helped boost world prices, was a big blow to some countries in West Africa and the Middle East that rely on India for most of their requirements of the food staple.“Indian rice millers are going to request the new government to allow broken and white rice exports,” said B.V. Krishna Rao, president of the Rice Exporters Association. The industry is fine with a levy, but restrictions should be lifted, he said.

Supplies are ample in the the country and the forecast of an above-normal monsoon raises prospects for 2024-25 harvests, Rao said.

The industry has been lobbying the government to reduce a 40% duty on wheat to make overseas buying viable, something India hasn’t done at large scale since 2017-18. Local supplies have become tighter due to large purchases by state agencies for various welfare initiatives, and retail wheat and flour prices are up about 5% from a year earlier. Wheat futures in Chicago have jumped more than 9% so far this year.


The country needs to import 2 million to 3 million tons of the grain this year from overseas markets to improve its availability in the domestic market and create a buffer, said Navneet Chitlangia, senior vice president at the Roller Flour Millers’ Federation of India.

The US Department of Agriculture’s Foreign Agricultural Service had predicted India wheat imports at 2 million tons in the season that began on April 1 on steady local demand.

Concerns of flour millers and bread makers about dwindling stockpiles will continue for months as sowing for the next crop will begin in October and November, while harvesting will start only in March 2025.

The world’s second-biggest sugar producer extended its restrictions beyond October. It introduced a new system in 2022-23 and limited exports to about 6 million tons, compared with unrestricted 11 million tons a year earlier. The nation is yet to announce this year’s quota.

The country has enough reserves for local consumption as well as shipping 2 million tons this season, said Deepak Ballani, director general of the Indian Sugar and Bio-energy Manufacturers Association. “We expect the government to allow exports as requested by us,” he said.

Good pre-monsoon rainfall and the forecast for above-normal precipitation this year would not only ensure comfortable supplies for domestic consumption, but also sustain the ethanol blending program, he said.


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