Wheat output may decline on delayed planting

Wheat prices may rise further because farmers in India, the world's second-biggest grower, may harvest a smaller crop after dry weather delayed planting.

The crop may decline 5 per cent to as low as 72 million metric tonnes in the March-April harvest from 75.8 million tonnes a year earlier, S Pramod Kumar, president of Karnataka Roller Flour Mills Association, said yesterday. That's less than the government estimate of 74.8 million tonnes.

"Production will fall because of the delay in planting in the biggest growing state of Uttar Pradesh," Kumar said in an interview. He is one of the speakers at a conference that started in Bangalore yesterday.

A smaller harvest in India will further put pressure on the South Asian nation to increase overseas purchases, which may reduce global stockpiles that the US government forecasts to be the lowest in three decades.

Global wheat prices have more than doubled in the past year, and climbed to a record yesterday on the Chicago Board of Trade, the biggest grain market.

India may import about 3 million tonnes of wheat in the year starting April 1, Mark Samson, vice president for South Asia at the US Wheat Associates in Singapore, said in an interview in Bangalore on February 7.

The country, the world's largest wheat user behind China, has since July imported 1.79 million tonnes to build state reserves amid record prices.

Wheat futures for March delivery on the Chicago Board of Trade rose the daily limit of 30 cents, or 2.8 per cent, to a record $10.93 a bushel yesterday.

Prices have advanced the limit for five sessions. The rally in wheat has accelerated in the past year after weather damaged crops in the world's biggest producers.

Global inventories of wheat are expected to fall to 109.7 million metric tonnes by the end of the marketing year on May 31, down 1.1 per cent from the government's January estimate and the lowest since 1978, according to the US Department of Agriculture.

Stockpiles at state warehouses may total 5.3 million tonnes by April 1, more than the 4 million tonnes needed for emergencies, because of recent imports, Alok Sinha, Chairman of state-owned Food Corp. of India, the nation's biggest buyer of food grains, said yesterday in Bangalore.

The government, which will start purchases of the grain from the new crop in April, needs 1 million tonnes a month to distribute to the poor. It had 8.5 million tonnes of wheat at its warehouses as of yesterday, Sinha said. The government plans to buy 15 million tonnes of the grain from the farmers, up 35 per cent from a year earlier, he said.

"Import decision will depend on how much the government finally procures from the farmers this year," said K S Kamala Kannan, president of Tamil Nadu Roller Flour Mills Association.

The area under winter-sown wheat, used to make flat bread and biscuits, was planted to 27.6 million hectares (68.1 million acres), 2 per cent less than a year earlier, India's Farm Ministry said on February 1.

The crop is sown from October to December. Harvesting begins in March, with production second only to that of China.

Weather has been favourable so far and it should hold up to help the farmers match last year's output, B Mishra, head of the Directorate of Wheat Research, a state body that develops high-yield seeds, said yesterday in Bangalore.