February 3, 2006

India imports wheat in a hurry

Pressured by rising domestic wheat prices, India said on Thursday it would immediately import 500,000 tonnes of wheat to increase supplies and stave off inflation. 

The move marked the first time since 1999 that the government is importing duty free wheat through the State Trading Corporation in southern India. India normally imposes a 70 percent duty on wheat imports, making it unviable for traders to effect imports.

Wheat will be imported only in the southern states, according to Farms Minister Sharad Pawar adding it will take about 60 days for the order to reach India.

He added that the country's new wheat crop would be around 74-75 million tonnes. Last year, India's wheat output dropped to about 72 million tonnes due to poor weather. The minister said India is importing wheat despite a bumper crop to avoid any risks should the crop be delayed.

Traders had been expecting India to import wheat after grain agencies cut purchases but the government said it was confident supplies were enough to meet demand. .

Australia's wheat exporter AWB had said in December that India might import as much as one million tonnes of wheat in 2006 to meet shortages.

Pawar said wheat prices in most parts of the country were under control with the government releasing additional stocks into the open market. However, prices in southern India remained high. Wheat in south Indian markets is costing 1,100 rupees/100kg (US$24.9/100kg) to 1,200 rupee/100kg (US$27.2/100kg), compared with about 900 rupees/100kg (US$20.4/100kg) in the rest of India.

Wheat stocks were at around 4.7 million tonnes on Feb 1, adequate to meet demand from public distribution systems until fresh procurement starts at the end of March, said Pawar.

India's wheat crop is sown in November and December and harvesting begins in April in the main northern growing states of Punjab and Haryana.