May 6, 2013
India raises its wheat crop forecast
India has increased its wheat output forecast for this year to just short of last year's record, and pressures the government to cut export prices so that it can reduce overflowing stocks in silos.
India, the world's second-biggest producer of wheat after China, is expected to produce 93.62 million tonnes of the grain in the current crop year to June, the farm ministry forecast on Friday, compared with last year's record 94.88 million tonnes.
The previous forecast on February 8 was for a harvest of 92.3 million tonnes against demand of about 76 million tonnes.
The South Asian country has been trying hard to cut its huge stocks through exports since July last year and has offered a total of 9.5 million tonnes for export. While the government needs some stockpiles to supply its programme of subsidised food for the poor, its incentives to farmers to secure output have been more than enough to produce years of bumper harvests.
Even with plans to extend the amount of cheap food on offer, it needs to cut stocks, which were six times target at 24.2 million tonnes on April 1.
"They do not have any other alternative than to reduce the floor price for wheat exports," said Tejinder Narang, adviser at New Delhi-based trading company Emmsons International.
India is currently holding to a floor price of US$300 per tonne for wheat exports, making its offer of the grain unattractive compared with global prices of US$270-280 per tonne.
India's total grains output in 2012-13 should be 255.36 million tonnes, down around four million tonnes from a year ago, according to the farm ministry's latest forecast. India's rice output is estimated to be 104.22 million tonnes, compared with 105.31 million tonnes a year ago as droughts over some growing areas trimmed harvests.
India, also the world's second biggest producer of rice, does not allow rice exports from government stocks which are also there to be given cheaply to the poor, but permits them by private traders.
The farm ministry's latest forecast also raised production figures for sugarcane, corn and lentils, but kept the estimate for cotton unchanged.