Punjab wheat buying may dip to 9 mn tonne

The Punjab government's wheat procurement is likely to be at around 8.5-9 million tonne in the marketing season 2006-07, marginally down from last year's 9.3 million tonne, said SS Channy, managing director of The Punjab State Co-operative Supply & Marketing Federation Ltd (Markfed).

"Also, the current rabi wheat crop in Punjab would be lower from last year's 15.3 million tonne to 14.6 million tonne," Channy said on the sidelines of Grain Asia 2006.

Official estimates peg the country-wide rabi wheat crop output at 74-75 million tonne, compared with 72 million tonne last year. Procurement for the year 2006-07 is estimated at 16 million tonne compared with 14.7 million tonne last year.

In view of the recent government decision to import five lakh tonne of wheat, Channy said, "The government should increase the minimum support price of wheat to encourage farmers to produce more." He, however, refused to comment on the extent of the rise. The current MSP of wheat is at Rs 650 per 100 kg.

In the first fortnight of January, wheat prices spiralled to an all-time high of Rs 1,055 per 100 kg following speculation of short supply.

Taking cue from prevailing prices, Markfed is considering buying 50,000 tonne in Uttar Pradesh in the harvest season, starting late March, for trade purposes.

"We may join hands with a multinational company for the whole programme," said Channy. He, however, refused to divulge further details.

According to market players, the wheat scarcity scenario has just started in India and may continue for another three years. "Next year onwards, India may need to import about 2-3 million tonne," said an official of a Mumbai-based physical trading house.

Market players estimate that Australia would bag majority of the tenders floated by the State Trading Corporation of India (STCI) for half-a-million-tonne of wheat.

The tender is scheduled to close at noon on February 20. The offers will be valid for acceptance by STCI till 11 pm on March 1.

As per the tender conditions, the arrival of imported wheat should be between March and mid-May, 2006, with at least 2.5-3 lakh tonne coming into the country by April. This is largely to do with low wheat stocks with the Food Corporation.

As on February 1, FCI stocks stood at just about 47 lakh tonne. The imports are to be duty-free. It is also the first time since 1999 that the government is importing through STCI as the open market prices have been rising in the non-wheat producing states, especially Kerala and Karnataka.