Wheat News | Wheat Inventories in India to Remain Huge

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Wheat inventories in India are likely to remain large given the expectation of another bumper crop this year and limited export opportunities, said the Food and Agriculture Organization (FAO) of the United Nation in its latest report.

Inventory in India, another major producer and stockholder, is forecast to remain unchanged at a five-year high of 17.8 million tonnes. But another bumper year for wheat in 2010 may increase the inventory further, said the report. The forecast assumes significance as the country has not opened wheat for exports despite excessive supplies in the domestic market.

Since, the United Progressive Alliance government has been formed without any alliance pressure and most importantly, the inflation remains under control, trade sources estimate the government may allow wheat exports in near future primarily because of global trade deficit.

FAO’s first forecast for wheat trade in 2009-10 stands at 114 million tonnes, down as much as 8 per cent, or 10 million tonnes from the estimated 2008-09 record volume.

Wheat export was suspended in May 2007 to control inflation that shot up over 13 per cent. The government also suspended futures trading in wheat due to the fear of price rise on traders’ speculation.

Meanwhile, FAO has estimated India’s wheat production to decline marginally by one per cent to 77.6 million tonnes in 2009 on favourable climatic condition throughout the season.

The specialised agency of the United Nations, which leads international efforts to defeat hunger, has forecast global wheat output to decline by 4 per cent to 655.8 million tonnes in 2009 compared with 684.6 million tonnes in the previous year.

The agency estimates total course grains’ output to remain rangebound at 37.8 million tonnes this calendar year compared with 38 million tonnes in the last year.

But, the global coarse grains production is likely to decline by 4 per cent at 1,098.5 million tonnes this year compared with 1,142.3 million tonnes in the previous year.

The 2008 paddy season has just been completed with the harvesting of secondary crops in Asia. Boosted by excellent results of these crops, global paddy production is now estimated at 689 million tonnes, equivalent to 460 million tonnes of milled rice, well above earlier expectations and 4.3 per cent more than in 2007.

But the sector’s attention is now turning to the 2009 season, which is already well advanced in all but the critically important south-eastern Asian region, where farmers are awaiting the imminent arrival of the monsoon rains to plant their crops.

Preliminary information on plantings and crop development over the 2009 season has been favourable. As a result and assuming a normal rainfall pattern in Asia in the coming months, world production in 2009 could gain a further 1 per cent and reach 696 million tonnes (465 million tonnes, milled equivalent), FAO said.

The relatively moderate increase expected in 2009 reflects less attractive prospects for producer returns. However, in spite of financial constraints, many governments have maintained their support to the sector through input subsidies, investment programmes and direct price incentives, which, barring any major setback, is likely to sustain production growth.

Trade sources estimate India’s rice output to remain rangebound at 147 million tons in 2009 provided monsoon arrives in time and distributed evenly.

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