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Is the export door opening with India?

Ag Marketing IQ: Despite trade agreement and tariff hurdles, India is importing more ag products. The U.S. demand opportunity lies with ethanol, wheat and soybean oil.

Naomi Blohm, senior market adviser

April 4, 2024

5 Min Read
U.S. and India flags against sky
Getty Images/3dmitry

Now that the calendar has flipped to April, news for the grain market may be muted as we head into spring planting season. A few things did catch my eye this week in the search for fresh global demand news which may help support grain prices in the short term.

What’s happened

If you follow my writings, you know that I am quite intrigued by India, their growing population, and a growing demand for proteins and food resources. Back in December, I provided context regarding India’s growing need for protein demand, and overall food demand as their population booms.

While the following news is quite frankly not a major market mover in the short term, it does continue to set the tone for potential growing demand for American agricultural exports.

From a marketing perspective

Corn, soybeans and wheat each received friendly tidbits of demand news this week coming from India.

Soybean oil

Soybean oil demand in India is slowly trending higher. Traditionally, India has been a large purchaser of palm oil and sunflower oil. However, when the war in Ukraine began two years ago, India began to quietly open its doors to larger imports of soy oil. Much of the soybean oil imports are said to be from South America, with the United States slowly gaining market share.

Related:India: The new global commodity powerhouse?

In January, the Foreign Agricultural Service wrote that, “Soybean oil is India’s second most imported oil, totaling $4.8 billion and comprising more than a quarter of vegetable oil imports in FY 2023. The United States has occasionally been a supplier of soybean oil to India when market conditions are favorable, including in 2022, but imports face stiff competition from other substitutable oils like palm and sunflower, and from imports from India’s traditional soybean oil suppliers, Argentina and Brazil.”

Then this week, according to an article from Reuters, it was announced that Indian soybean oil imports increased 27% during the month of March (up from the month prior), to 220k million metric tons. In addition, March sunflower oil imports were at 448k metric tons and up 51% from Feb. The combined total edible oil imports for India during the month of March was said to be the largest amount in six months.

Wheat

Wheat production in India is pegged at 110.55 MMT according to the most recent USDA WASDE report. India is the world’s third largest producer of wheat behind China and the European Union. Everything that India grows, they use domestically. India’s total demand for wheat is pegged at 111 MMT.

This week, the USDA Foreign Agricultural Service post in India has forecast that India may import 2 MMT of wheat in 2024-25 despite record production due to strong demand and low stocks within India. While it’s likely that Russia will gain a large portion of those expected sales, it does bode well for overall global demand for wheat as global ending stocks of wheat continue to trend lower.

Ethanol

Not corn, but ethanol imports are also on the rise in India. In January, the Foreign Agricultural Service wrote: “Ethanol is imported by India for medical and industrial uses, and the United States has long been the top supplier, most recently capturing 84% of the import market in fiscal year 2023. Importing ethanol for fuel blending is prohibited. Ethanol is used in manufacturing to produce disinfectants and hand sanitizers as well as solvents, carriers in foods and cosmetics, commercial deicers, pharmaceuticals and organic chemicals.”

Prepare yourself

The demand news from India overall remains encouraging and is a story that suggests additional demand growth in the future. Political hurdles to clear regarding trade with India, include existing tariffs on some agricultural products. Additionally, India is a member of the BRICS economic group, which also includes Brazil, Russia, China and South America.

Finding new growth and inroads for American agriculture demand is paramount. As I learn more about India, and potential growing demand there, I see hope for demand for U.S. ethanol, wheat and soybean oil.

Reach Naomi Blohm at 800-334-9779, on X (previously Twitter): @naomiblohm, and at [email protected].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

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About the Author

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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