Traders to import 80,000 tonnes wheat as rains damage standing crop

With unseasonal rain and hail  threatening to damage 5-10 per cent of the standing crop, traders and private flour millers have signed contracts to import 70,000-80,000 tonnes of wheat.

“Traders have entered into contracts to import wheat as there is a fear that much of high-quality fresh wheat, used by flour mill owners, might have been damaged in the recent rains, mainly in Madhya Pradesh,” an official from a leading global trading firm told Business Standard.

He added the development might be out of concern  over the damages and might not become a trend in the coming days, as grain stocks in state-run warehouses are much more than required.

Purchases by India, the world’s second largest wheat consumer and producer, could push global wheat prices, which have rallied six per cent in the past two sessions on the Chicago Board of Trade.  

A Reuters report  said flour millers had purchased 70,000-80,000 tonnes of Australian prime wheat for April-May shipment at $260-$265 a tonne, including cost and freight.

Last week, the Union government had lowered its estimate of crop damage in the recent rain and hail across several states, following a meeting between Prime Minister Narendra Modi and officials from the affected states.

According to the government's revised estimates, standing rabi crops in 10.67 million hectares of land has been damaged in the recent rains and hailstorm, which is 17.26% of the total rabi acreage of cereals. The preliminary estimate had cited the figure as 18.1 million hectares.

While wheat suffered the most damage, the extent of damage in the revised estimates is much lower than the preliminary report - at 6.3 million hectares and 12.1 million hectare, respectively.

This damage estimate also includes horticulture crops such as onion, mango, grapes, and banana, which was also the case during the earlier preliminary assessment done by the agriculture ministry.

Stocks lying with the state-run Food Corporation of India totalled 19.52 million tonnes on March 1, which is substantially higher than a target of four million tonnes. However, some of the older stocks - two years and above - might be of lower quality. In addition to the rain-damage, Indian millers are also importing because of global freight rates, which plunged to a record low last month, the Reuters report said.