February 19, 2010

India's winter crop output is expected to offset the summer sown deficit and prices of food crops would be eased when the winter harvest hits the market, according to Agriculture Minister Sharad Pawar.

A government crop estimate on February 12 forecast output for the fiscal ending March 31 slightly lower at 80.28 million tonnes, following which wheat futures on local commodity exchanges gained nearly 2% while spot wheat prices surged 12% on year to INR1,358 (US$29) per 100 kilograms amid fears of a grain shortage.

Wheat, sown in the October-November period, has benefited from late monsoon rains and a cold weather spell in January in key growing states in northern India, Pawar said.

A bumper wheat crop will help offset the fall in summer-sown crop output, mainly in rice, which was hit by the worst monsoon rains in nearly four decades last year.

Meanwhile, India's Finance Minister Pranab Mukharjee too expressed a hope of easing food inflation within few months.

Inflation rose to over a 13-month high of 8.56% in January from 7.31% a month ago, driven mainly by higher food prices. Food inflation rose for the third successive week and moved closer to 18% in the week ended January 30.

Winter crop is expected to hit the market starting next month and will considerably ease the price situation.