India?s wheat output is likely to exceed the government?s latest estimate of a record 88.31 million tonne in the year through June, as high planting and congenial weather have brightened the crop prospects. A higher output might weigh down prices, exerting a salutary effect on food inflation.
?The weather is good, with no major pest attacks so far. So output is likely to cross 88.31 million tonne,? agriculture secretary PK Basu told FE.
Asked if wheat production will touch an all-time high of 90 million tonne in 2011-12, Basu said, ?It?s still a speculation. But if the current situation continues, maybe we can achieve that. The picture will be clear by the time the third estimate comes.? Output of the staple winter grain has climbed at a fast pace since 2009-10 when the country harvested 80.80 million tonne.
The agriculture ministry has been closely monitoring the prospects of the crop, as the country is planning to implement a proposed food security act that will widen the government?s subsidised grain sales to the poor.
Earlier this year, the agriculture ministry had set a wheat output target of 84 million tonne for 2011-12. India, the world?s second-largest producer, had harvested a record wheat crop of 86.87 million tonne in 2010-11.
Wheat planting, which started in late-October, rose marginally from last year?s record level to reach around 29 million hectares in 2011-12, boosting hopes that the country was well on course to reaping a bumper harvest for a third straight year.
Analysts said a prolonged winter spell has helped the crop grow well and the large-scale government intervention has prevented any escalation of pest attacks, but the terminal heat in March and April will be the key indicator if production can breach the 90-million tonne milestone.
Wheat harvesting has begun in some states and will pick up pace by mid-April, while procurement by state-run agencies will start from April 1. The government is heavily banking on higher output of wheat and rice in 2011-12 to drive up overall grain production, pegged at 250.42 million tonne, as the production of pulses and coarse cereals may trail last year?s level due to less planting.
Higher wheat and rice output will likely extend another year of steady grain supplies, helping the government in its battle against food inflation and ambitious plan to implement the food security law that aims to supply cheaper grains to 75% of rural and 50% of urban households. The country needs over 60 million tonne of rice and wheat stocks a year to meet its obligation under the proposed Food Security Act, and an increase in output will help the government in one of its biggest populist drives.
Higher wheat output will also encourage the government to maintain favourable export policies. The country had banned wheat exports since 2007 to maintain steady domestic supplies and lifted the restriction last year to ease storage space in overflowing granaries. Official grain stocks swelled by 18% to 54.52 million tonne as on March 1 from a year earlier.
Wheat dara fell R20 to R1,260-1,270 per quintal, and the grain used by flour millers traded lower by R30 to R1,270-1,275 per 90 kg. Wheat futures on the National Commodity and Derivatives Exchange shed 1.5% to R1,265 a quintal in the intra-day trade on Thursday amid mounting expectations of a higher output this year.
