February 22, 2005

 

 

Surplus wheat in India paves way for export

 

Wheat output in India is likely to rise to 75 million tons this year after widespread winter rains, leaving a surplus of 2-3 million tons for exports.

 

Widespread rains in northern India this month have helped the flowering of the wheat crop which is sown in the winter months of October and November, and harvested in March and April.

 

India, a leading grain producer, harvested 72 million tons of wheat last year.

 

"As far as food security is concerned, we are very comfortable with stocks," according to Food Corporation of India Chairman V.K. Malhotra.

 

"I expect 2 to 3 million tons surplus for exports this year as we are expecting a good wheat crop of 75 million tons."

 

Global grain traders are closely watching India's stock position and its wheat export policy as the country put exports on hold after stocks fell following a severe drought in 2002.

 

Until then, India had been selling 150,000 to 200,000 tons of wheat a month to the Middle East, Africa and Southeast Asia.

 

Malhotra said the agency had 11 months of rice stocks and 6 months of wheat stocks on February 15. "I can provide rice for the next 11 months even if the crop fails and wheat stock is going to go up from April when procurement gathers pace."

 

India's wheat stock on February 15 stood at 6.95 million tons and rice was at 14.8 million tons compared with the norm of 6.33 million tons of wheat and 9.9 million tons of rice.

 

FCI, Asia's biggest food procurement and distribution agency, moves about three million tons of grains a month to needy states.

 

It plans to procure 18.5 million tons of wheat this season compared with 17 million tons a year ago.

 

Malhotra said FCI was procuring around a quarter of India's total wheat production while half the output was retained by farmers for consumption, re-sowing and trading in exchange of other commodities. The rest is sold in the open market.

 

He said the government was debating whether to resume grain exports but was yet to take a decision.

 

But traders are optimistic the country might resume wheat exports with prospects of a bumper crop.

 

Indian wheat prices, which usually rise between November and February, have remained stable because of adequate stocks across the country, the official said.

 

"Wheat prices will be stable because of a good crop and we will take care of any distress sales through a support price."

 

Malhotra said the quality of Indian wheat crop is good and there was no pest attack in any of the growing regions.

 

India's northern states of Punjab, Haryana and Uttar Pradesh and the central state of Madhya Pradesh are the main production regions of wheat.