Weak harvest to drive Indian wheat imports to 10-year high.

India’s wheat imports this season will hit their highest in the decade, thanks to a second successive dryness-depressed harvest – although supplies are not so squeezed as to mean India’s government will buy from abroad.

India, the world’s second-ranked wheat growing country, after China, will import 2.0m tonnes of the grain in 2016-17, on the April-to-March basis, the US Department of Agriculture’s New Delhi bureau said.

The estimate reflects a harvest which, at 88m tonnes according to the bureau, came in well below the government figure of 94m tonnes, hurt by a second successive year of below-average monsoon rains.

“Yields in the partially irrigated states of Uttar Pradesh, Madhya Pradesh, Rajasthan and Bihar are 5-10% below normal due to moisture stress conditions during most of the growth stage and rise in the temperature at the time of harvest,” the bureau said in a report, acknowledging some trade output estimates as low as 81m tonne.

Imports debate

The bureau’s wheat import estimate is twice the official USDA forecast, and the International Grains Council figure, and would be the highest since 2006-07.

It would also represent a marked turnaround from the average net exports of more than 5m tonnes in the three seasons to 2014-15, before the monsoon disappointment – often a feature in India during El Nino periods.

That said, market talk in India has suggested imports well above 2m tonnes in 2016-17, with some ideas that the country’s government, which distributes millions of tonnes of wheat through welfare schemes, will need to step into the market to ensure sufficient supplies.

In Australia, which has already sold some wheat to India for 2016-17, grain trader Nidera Australia has forecast that Delhi’s need to source supplies, and the likelihood of farmers holding back on sales in the hope the squeeze will drive higher prices, “will see the Indian government stepping into the world market to import 2m-5m tonnes”.

‘Relatively tight’

However, the USDA bureau said that its Indian import estimate was based solely on demand from private buyers wishing “to take advantage of the availability of cheaper wheat in the international market”.

India’s government “is unlikely to import wheat in the upcoming marketing year, unless the open market prices increase significantly,” the bureau said.

While the government’s wheat procurement drive over 2016-17 will, at a forecast 23.5m tonnes, be “well below last year’s 28.1m tonnes and government’s target of 30.5m tonnes”, officials will have sufficient inventories to get by.

“The government wheat stocks during the current year are likely to be relatively tight,” the bureau said.

“However, they will be sufficient to meet the wheat requirement for public distribution and other government welfare scheme – 24.5m tonnes last year – and prescribed minimum ending stocks, at 7.5m tonnes.”

‘Heat spilling over’

Indian flour mills are reported already to have bought for import 350,000 tonnes of Australian wheat and 150,000 tonnes of French wheat.

Nidera Australia said that the “heat from India is spilling over into the local Australian market, with more enquiry and more transactions in old crop wheat.

“This is business the Australian market needs to see and if it does come to fruition the trade will not need to be as aggressive in chasing alternative demand for Australian wheat for the rest of 2016.”

Source : hellenicshippingnews.com