NEW DELHI: The global wheat trade is likely to slump in 2009-10 due to lower purchases in West Asia and north Africa, UK-based International Grains Council (IGC) said. A slide in trade is expected to keep international prices in lower circuit. Imports by India could, however, increase the global trade and provide some momentum to prices.
Last year, nearly 136 million tonnes of wheat was traded in the global market, the latest report said. This year the global wheat trade is expected to decline by 17% to 113 million tonnes. According to the IGC report, imports by Iran are projected to fall by around 60% to 3.5 million tonnes as its crop is showing moderate recovery.
The Food Corporation of India and the state agencies held over 285 lakh tonnes of wheat by October 1, well above the minimum buffer norm of 110 lakh tonnes. Yet, the government has not taken the possibility of importing wheat off the table primarily in view of estimates that the rice output could be lesser by well over 100 lakh tonnes this year.
The Centre is expected to take a call on relaxing plant quarantine restrictions on wheat imports only after a clear picture emerges on the size of the paddy crop due for harvest from next month.
The current thinking is that the government should encourage flour mills in the south to import wheat rather than source it from Punjab, Haryana or Uttar Pradesh. That would increase wheat availability in the north and is, consequently, expected to relieve pressure on rice supplies in that part of the country.
Mills in the south are reportedly sourcing regular quality dara wheat from Uttar Pradesh at around Rs 13,700 a tonne (mill delivered), with better quality ‘Lokwan’ grain from Madhya Pradesh and Gujarat costing Rs 800-1,000 more. In comparison, Black Sea (Russia/Ukraine) origin wheat could be imported in end September at below $200 or Rs 9,592 a tonne (cost & freight), while the landed price of Australian Prime Wheat (which is comparable to Lokwan) in Chennai reportedly works out roughly to $260 or Rs 12,470 a tonne. Inclusive of transport and other charges, too, imported wheat is cheaper by about Rs 1,500-3,000 a tonne than domestically sourced grain.
The IGC has forecast that imports by north Africa will be about one-fifth lower than in 2008-09, at 18.3 million tonnes as large domestic supplies will limit import needs in Algeria and Morocco, it said, adding that higher production is likely to cut imports by Syria and Turkey at 0.4 million tonnes and 1.7 million tonnes, respectively.
However, Saudi Arabia is expected to import 1.6 million tonnes up 23% from last year, as local output continues to decline following changes in agricultural policy, the IGC report said.
The report also highlighted that the shipments from five major exporters — the US, Europe, Canada, Australia and Argentina are placed lower by 19.2% to 74.4 million tonnes.
Source : The Economic Times