Wheat imports may surge 33%

Government may import more wheat than its earlier forecast to meet demand from flour mills and biscuit makers.

Imports may reach 4 million tonne this year, a third more than the 3 million tonne Agriculture Minister Sharad Pawar had said the government might purchase, according to three traders and seven company officials surveyed by Bloomberg News.

Increased imports by the country may strain global stockpiles of the grain forecast to slide to a 25-year low. Wheat demand may reach 75.5 million tonne, exceeding a government output estimate of 72.5 million tonne, as the nation's record economic growth boosts consumption of breakfast cereals, noodles and biscuits.

"Even if the production reaches the level estimated by the government, it's very clear that India is going to import wheat because of an increase in consumption,'' M V Balasubramaniam, managing partner of Narasu's Roller Flour Mills, said in phone interview from Salem.

Global wheat supplies will decline to 121.8 million tonne at the end of the marketing year on May 31, the lowest since 1982, the USDA said on January 12. Production will drop to 590.8 million tonne, 5 per cent less than last year.

Global wheat prices climbed to a 10-year high in October in partly because India resumed imports in February 2006 after six years to meet a production gap. The nation purchased 6.5 million tonne. Prices are up 24 per cent in the past year.

Wheat for delivery in May rose 1 per cent to $4.23 a bushel in the after hours electronic trading on the Chicago Board of Trade today, ending three days of losses.

The government may buy 15.15 million tonne from this year's crop, harvesting for which began last month, compared with 9.23 million tonne last year, the junior food minister Akilesh Prasad Singh said March 2. It has guaranteed farmers Rs 850 a quintal, which is less than the prevailing market price.

"They will not be able to buy as much wheat as they want because the market price is above the government rate,'' said K S Kamala Kannan, chairman of Naga, which owns flour mills in the southern Tamil Nadu state. "Imports have become a reality.''

Lower procurement by the government means that the state warehouses may hold 3.5 million tonne of wheat, less than the buffer stock of 4 million tonne, the Foreign Agricultural Service at the US embassy in New Delhi said in a report dated February 21.

"Despite higher wheat production, the overall wheat supply situation and wheat availability, from the government stocks in particular, is likely to remain tight. This is due to low carry-over stocks and likely low procurement,'' the report said.

The country could import 3 million tonne this year, if required, to augment supplies, Minister Pawar said last week. "Food habits are changing. Even states that never demanded wheat are now asking for it and are consuming it,'' he said.

India's inflation has stayed at a near two-year high of 6.46 per cent in the three weeks ended March 17. The ruling Congress party, which lost two state elections last month, wants to curb inflation before polls this month in Uttar Pradesh, which sends a seventh of all lawmakers to parliament.

The polls will set the tone for general elections in two years.

"Although the new crop is better than last year, we do expect India to import this year mainly with a view to check prices domestically,'' Vijay Iyengar, managing director of Singapore-based Agrocorp International said in an e-mail.

The government may buy 3 million tonne and non-state trading company could import about 1 million tonne, he said.

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FUTURE TENSE

Wheat demand in India may reach 75.5 million tonne, exceeding a government output estimate of 72.5 million tonne

Global wheat supplies will decline to 121.8 million tonne at the end of the marketing year on May 31

Production will drop to 590.8 million tonne, 5 per cent less than last year

Global wheat prices climbed to a 10-year high in October in partly because India resumed imports in February 2006