May 4, 2007

India wheat output may rise 6.3 percent after good prices boost plantings

Wheat production in India, the world's second- largest consumer of the grain, is expected to shoot 6.3 percent after world prices reached a 10-year high in October, boosting acreage to 4.5 percent, the US Foreign Agricultural Service said.

Wheat production will rise to 73.7 million metric tonnes in the marketing year that began April 1, from 69.3 million last year, according to US Foreign Ag service. The estimate is up from 72.5 million forecast in February and slightly below the 73.7 million forecast by the India Ministry of Agriculture.

Most of the increase in production is expected in states where consumption exceeds output, while supply will be about the same in states with surpluses, according to the report. Government purchases have been slowed by rains and farmers' increased retention of crops in pursuit of higher prices.

Wheat purchases by the Indian government fell 6.6 percent to 8.38 million metric tonnes between April 15 and May 3, from 8.97 million tonnes a year earlier, the ministry said.

Reserve inventories before the harvest were pegged at 5 million tonnes, up from 3.5 million estimated in February and 2 million a year earlier, reducing the import forecast. India may import 3 million metric tonnes, down from the earlier projection of 6.3 million last year.

India invited bids April 30 for the purchase of 1 million metric tonnes of the grain to bolster government stockpiles as domestic demand outpaces production. State Trading Corporation, a government-run company, will buy for delivery after all bids are collected on May 10.

Wheat for July delivery rose 1 cent, or 0.2 percent, to US$4.945 a bushel on the Chicago Board of Trade, after yesterday closing at a two-week low. Futures have risen 40 percent from a year ago as drought reduced global production 4.3 percent in 2006 from a year earlier.