May 16, 2005

India's wheat output may be down by 2 million tonnes this year

Poor weather may see India's wheat production lowered by 2 million tonnes this year, around 72-73 million tonnes, lower than earlier estimates, a trade body said Thursday.

Earlier the agriculture ministry and farm scientists had estimated wheat production to surge to 74-75 million tonnes, crossing last year's 72.1 million tonnes.

"I don't see exports happening," DP Singh, chairman of the All India Grain Exporters Association said, adding "Procurement is going to be lower and domestic wheat prices are rising."

Hailstorm and rains in February and March have damaged the crop.

Earlier, the government was upbeat about its wheat crop because of sufficient soil moisture at the time of sowing in November and winter rains. Wheat harvesting in the main growing regions in the northern states of Punjab, Haryana and Uttar Pradesh and central Madhya Pradesh is almost complete and grain arrivals are picking up in the market.

Global grain traders are closely watching India's wheat output as the government had said the country would resume grain exports after the procurement of this year's crop is over in May and June. The government had also been planning to give an export subsidy to traders to sell grains if production surged to 75 - 76 million tonnes as the country needs 65-66 million tonnes for domestic consumption.

The government put exports on hold after stocks fell following a severe drought in 2002. Until then, the country had been selling 150,000 to 200,000 tonnes of wheat a month to the Middle East, Africa and Southeast Asia.

Procurement of wheat by the Food Corporation of India and other agencies is likely to fall short of the estimated 18 million tonnes. Last year, the country's food agencies bought 16.7 million tonnes of wheat mainly for distribution to the poor at cheaper rates and to deficient states.

Food procurement agencies had bought about 14.1 million tonnes of wheat as on May 6 compared with 15.1 million tonnes at the same time last year. Wheat prices have risen Rs 200 a tonne to around Rs 7,400 a tonne in Delhi because of lower procurement.

The country could import wheat from Australia, Canada or the Commonwealth of Independent States, said Mr Singh.