Govt may import 2 mt wheat to check price rise

India, the world's biggest producer of wheat after China, may import the grain for a third year after dry weather cut output, supporting prices that are at a record.

Imports may total 2 million tonnes in the year starting July 1, the Foreign Agricultural Service at the US embassy in New Delhi said in a report dated Februray 20. The country bought 1.8 million tonnes a year earlier.

India's production may drop 1.3 million tonnes to 74.5 million tonnes in the March-April harvest after farmers planted the crop on a smaller area compared with a year earlier, the report said. The forecast comes as wheat exceeded $12 a bushel for a first time on signs that global crop production isn't keeping pace with demand.

"Winter rains in major non-irrigated wheat-growing states were lacking,'' the report said.

Still, weather conditions that turned favourable last month may aid crop growth, partly offsetting production loss due to the decline in planting, the report said. The view echoes that of the nation's Agricultural Secretary P K Mishra, who forecast output will touch a record this year, helped by cooler temperatures.

Prices breach $12
Chicago wheat prices rose by the most in more than five years, breaching $12 a bushel for the first time as investors poured money into agricultural commodities on signs that global crop production isn't keeping pace with demand.

Global wheat stocks may fall to a 30-year low this year, while corn inventories are headed for the lowest since 1984, the US Department of Agriculture said on February 8.

Almost $1.5 billion flowed into farm commodities in the week to February 19, investment bank UBS AG said in an e-mailed report yesterday.

Wheat, soybeans, corn and palm oil are among commodities that have touched records this month, stoking prices of bread, pasta and noodles worldwide. The gains have driven up costs for food companies from Kellogg Co. to Nissin Food Products Co. and complicated efforts to curb prices in China, India and Malaysia.

"Speculators keep jumping into the market as supplies are very tight globally, especially spring wheat,'' Takaki Shigemoto, an analyst with Tokyo-based commodity broker Okachi & Co. Dry conditions in some wheat-producing areas in northern China and also lent support, he said.

Wheat for May delivery rose by the daily limit of 90 cents, or 8 per cent, to $12.145 a bushel in after-hours trading on the Chicago Board of Trade, the biggest one-day percentage gain since October 2002. It stood at $11.975 at 3:50 pm Singapore time.

The exchange expanded its daily limit after the contract surged by the previous 60-cent limit yesterday.