April 26, 2006


India's April wheat purchases down 3.5 million tonnes on-year



The Indian federal government bought 8.2 million metric tonnes of wheat from farmers during the April 1-25 period, down from 11.7 million tonnes a year earlier, government data showed Wednesday (Apr 26).


The government's local wheat purchases are an indicator of the availability of crops in the market and the country's import needs in the next few months.


"Even though we have raised the intervention price to purchase wheat from farmers in the middle of the season, it may take a few more days for us to gauge its impact," said a government official.


The official said the wheat procurement programme was off to a slow start this year, due to lower arrivals in the local market and higher purchases by private traders.


The official said the government is not unduly worried about not meeting its wheat procurement target for the current calendar year at 16.2 million tonnes, as planned imports will serve as a valuable instrument for adequate local supplies and price control for the benefit of consumers.


In India, the government purchases locally produced wheat at a set intervention price to ensure remunerative returns to farmers and sells it at subsidised rates through government-run shops.


However, the initial intervention price of INR6,500/tonne (US$144.2/tonne) for 2006 was lower than market rates, prompting farmers to delay sales in anticipation of higher prices at a later period.


In many local markets of the northern province of Uttar Pradesh, private traders are offering wheat around INR7,600/tonne (US$168.6/tonne) , still higher than the new higher intervention price of INR7,000/tonne (US$155.3/tonne).


Total market arrivals of wheat so far are estimated at 10.6 million tonnes, down from 12.4 million tonnes a year earlier.


While market arrivals have declined on year by 1.8 million tonnes, the government's own purchases have fallen by 3.5 million tonnes, indicating more purchases by private traders.


Procurement in the northern province of Punjab, the largest contributor of wheat to the government's granaries, is now estimated at 6.1 million tonnes compared with 7.5 million tonnes a year earlier.


India's local wheat crop is harvested in April and May.


Concerned over the decline in local purchases, the government has also announced a plan to import 3.0 million tonnes of wheat in addition to 500,000 tonnes already purchased from the international market.


In February, India decided to import wheat for the first time in six years.


The country has contracted a purchase of 500,000 tonnes of wheat from Australia's AWB Ltd and the first shipment arrived in the country Tuesday (Apr 25).


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