Bumper crop for wheat
April 17, 2017 at 9:57 AM ,
Mark Overseas
Wheat was one of the top losers among agri commodities in 2016. The 10% import duty that was imposed recently may not restrain the imports as the global supply of wheat is oversupplied.
This year the production of wheat is expected to reach 96.64 million tonnes whereas, compared to the last year the last year the production was 92 million tonnes and a year before that in 2014-15 it was 86 million tonnes. The planting for wheat this year is up by 8% compared to last year. The estimated consumption of wheat in India is around 94 million tons.
The excessive supply of the new season crop of wheat from Madhya Pradesh, Gujarat & Rajasthan has brought down the prices of wheat to $25.22 per quintal (100kgs), which is below the minimum support price (MSP). The government’s rigorous procurement effort has provided some support to prices but arrivals from Punjab and Haryana may push the prices down again.
In January alone, India imported more than 1 million tonnes of wheat. The recent hike in import duty, together with procurement support from the government, has provided the much needed support. With the upcoming arrival pressure to reach its peak, one may expect some slowing down of imports in the coming months. However, the flour millers, biscuit and confectionery manufacturers in southern India will continue to import their requirements from Australia and the Black sea region rather than buying from northern and central India because of lower international wheat prices and favourable rupee exchange rate.
The government's procurement target for rabi 2017-18 is around 33 million tonnes, i.e 43% higher compared to last year. The creation of 5,000 procurement centers in the State by the new government is likely to change this situation.
Following the USDA’s estimate of global production reaching an all-time high of 751.3 million tonnes (mt) in 2016-17 due to better crops from Russia, Argentina, Australia, and India.
To sum up, the pressure from North India may weigh down the current prices. As excessive domestic supply coupled with weak global price which may support the imports, will limit price gains and this will be corrected when the supply slows down.
The arrivals of wheat in India from 1st of April, 20147 to 17th April, 2017 are 7'714'280.26 tonnes.
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