February 11, 2013

In the crop year to June 2013, India's wheat output could slip about 3% from a record 95 million tonnes, but traders say the decline will not deter the government from exporting grain from its bulging inventories.

India, the world's second-biggest producer of wheat after China, is expected to produce 92.3 million tonnes of the grain this crop year, exceeding annual consumption of around 76 million tonnes for the sixth year in a row. Last crop year, wheat output was 94.88 million tonnes.

India also has huge stocks of wheat, estimated at 30.8 million tonnes on February 1 and nearly four times its target, thanks to years of bumper harvests. The government has been trying to reduce these stocks through exports. "This drop in total grains output will not reverse our free export policy on grains, particularly in wheat," said Tejinder Narang, adviser at New Delhi-based trading company Emmsons International.

India's total grains output in 2012-13 should be 250.14 million tonnes, down around nine million tonnes from a year ago, according to the farm ministry forecast.

India's rice output is estimated to be 101.8 million tonnes, compared with 105.31 million tonnes a year earlier. The government subsidises rice and wheat for poor people. India does not currently allow rice exports from government stocks but permits them by private traders.

The slight drop in total grains output was mainly due to lower rice production in the summer because of poor monsoon rains over the main growing areas.

The government will give further output estimates later this year. India's soymeal exports rose 25.4% in January from a month ago, fuelled by improved demand from Thailand, Vietnam and Iran, while concerns that bad weather could hit crops in Latin America also prompted buying.