Wheat production in India, the second-biggest grower, may advance 6.4 percent to a record for a fourth year after favorable weather and high prices boosted planting, a government official said.
Output may climb to 86 million metric tons in the year ending June 30 compared with 80.8 million tons the year earlier, P.K. Basu, Agriculture Secretary, said in an interview on Monday in New Delhi. That’s 2 percent more than the farm ministry’s April 6 estimate of 84.3 million tons.
A bumper harvest may help the government end a four-year ban on wheat exports, potentially cooling a 64 percent rally in prices in Chicago in the past year that partly fueled global food costs to a record in February. The Standard & Poor’s GSCI Agriculture Index has surged 72 percent in the past year as dry weather in Europe and China and floods in the U.S. eroded prospects for corn, wheat and soybean crops.
“If India allows exports that will increase wheat supply to the global market and be bearish for prices,” Erin FitzPatrick, a commodities analyst at Rabobank International in London, said in a phone interview on Monday.
World wheat production is projected at 664.3 million tons, the U.S. Department of Agriculture sad on June 9, down from 669.6 million estimated in May. Global inventories may total 184.3 million tons before the 2012 harvests in the Northern Hemisphere, compared with 187.1 million tons a year earlier, according to the USDA.
STOCKPILES TRIPLE
Wheat for July delivery gained 3.5 cents, or 0.5 percent, to $7.6325 a bushel by 5:17 p.m. Mumbai time on the Chicago Board of Trade, paring an advance of as much as 1.4 percent.
India banned shipments of wheat in early 2007 and non- basmati rice in April 2008 to bolster domestic supplies. State reserves of food grains totaled 65.6 million tons on June 1, almost triple the quantity five years ago, according to the Food Corp. of India.
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Higher than expected grain output in India, the world’s second-biggest consumer of rice and wheat, will cool rising food inflation in Asia’s third-biggest economy. An index measuring wholesale prices of agricultural products advanced 9.01 percent in the week ended May 28 from a year earlier, the highest level in eight weeks, the trade ministry said June 9. Overall inflation in India has been above 8 percent for 16 months.
“This is an unprecedented production and the bountiful harvest will not allow local prices to go up at all,” M.K. Dattaraj, former president of the Roller Flour Millers Federation of India, said by phone from Bangalore. “This will help the government ensure food security in the country. Wheat will contribute lesser inflation in the food basket.”