India Won't Import Wheat This Year on Local Purchases

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15 May 2008

India, the world's second-biggest wheat consumer, won't import the grain this year as purchases from domestic farmers reach a record, likely pressuring global prices of the commodity. "There's no question of importing this year,'' Agriculture Minister Sharad Pawar told reporters yesterday in New Delhi. Imports totaled 1.8 million tons in 2007.  Wheat has slumped 41 percent from its February record amid prospects of bigger harvests in producing nations. That's forced private suppliers such as Cargill Inc. to shun auctions in India, enabling the government to make record purchases since harvesting began April 1, Food Corp. of India. Chairman Alok Sinha said.
Food Corp., the nation's biggest buyer of grains, may have 21 million tons of wheat in reserves on July 1, enough to meet demand for more than 20 months, Sinha said last week. The state- run company bought 18.6 million tons since April 1, almost double from a year earlier, the government said today. Food Corp. only bought 11.1 million tons of wheat last year.
Wheat futures for July delivery fell 2.1 percent to $8.045 a bushel in Chicago on May 9 after the U.S. government said world output of the grain will rise to a record, rebuilding stockpiles that are forecast to fall to a 30-year low.
The grain has rallied 64 percent in the past year, reaching a record $13.495 a bushel on Feb. 27, as world inventories were forecast to drop to 110 million tons on May 31, the lowest level since 1978. Production for the year that begins June 1 will rise 8.2 percent to a record 656 million metric tons, boosting global reserves before next year's harvest by 13 percent, the U.S. Department of Agriculture said May 9.
India's wheat production, second only to that of China, may climb to a record 76.8 million tons in the year ending June, up 1 million tons from last year, according to the government.
Separately, India does not plan to ban futures trading in more agricultural commodities, Pawar said. The government last week banned trading in soybean oil, potatoes, chick peas and natural rubber to cool the fastest inflation since 2005.
The government, which buys grains at guaranteed prices from farmers to sell to the poor at subsidized rates, needs at least 25 million tons of rice and 12 million tons of wheat annually.

Source: Bloomberg