Thursday, February 14, 2008

Indian Wheat Imports Set to Rise

by Phillip Horton

India is the second biggest consumer of grain in the world, though the infrastructure in the agriculture sector of India has improved greatly it still needs grain imports. Any change in crop plantation or in monsoon patterns hampers the grain yield of India and hence like every other country it has to depend on the grain imports. According to Mark Samson, Vice President for South Asia of U.S. Wheat Associates, the Indian wheat imports may rise to up to 68% in the current year due to the record of high supporting prices. Indian wheat imports in the last year were recorded at 1.79 million tons while in the current year which will start from 1st of April the total wheat imports may touch the mark of 3 million tons.

The Indian agriculture ministry has already speculated that the wheat yield for March-April can drop down to 1 million tons and this decline in the wheat yield is attributed to the dry weather. This forecast by the Indian agriculture ministry comes at the backdrop of wheat being the commodity that performed well this year which is indicated in the record high climbing of the commodity on the three U.S. future exchanges. The commodity recorded such high trading on the US futures due to fears that supply will fall short when compared to the commodity’s demand in the market.

Mark Sampson who spoke at a conference in Bangalore, India seemed concerned that the Indian wheat harvest would find it difficult this year to match its earlier yield due to the fact that there was a delay in plantation because of the dry weather. The wheat futures for the March delivery this year on the Chicago Board of Trade recorded great heights. In Chicago the commodity of wheat is all set to gain its highest weekly gain which was not recorded in the last thirty two years. The rising is expected to be at 16% in Chicago. This gain would be the highest gain in wheat since 1975 which was recorded at 19%.

The Indian Agriculture secretary P.K. Mishra said that the Indian wheat harvest for this year would stand at about 74.81 million tons which for the last year was 75.81 million tons. The agriculture secretary was optimistic that this estimate was conservative but the Indian wheat yield may also reach its last year’s output given that the helpful weather stays like it is. The Indian wheat imports have continued for the two years so that there is no shortage in the country of the essential supplies that also included lentils and oilseeds. The Indian wheat reserves in the government warehouses can touch 5.3 million tons by April 1 or it may even total to one million tons which thus will be in excess during emergency situations. Another reason cited by Sampson for the Indian wheat imports includes the increase in the population and the high demand for products mainly made from wheat. There is also the issue of illegal grain going to Bangladesh which is estimated at about one million.

 

 

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