India likely to import more as output set to fall

Wheat production in India will probably fall short of a government forecast, spurring the world’s second-biggest grower to import a large quantity amid declining domestic inventory.

Production is set to total 91 million tonnes in the 2016-17 crop year, according to the median estimate of eight traders and analysts surveyed by Bloomberg. That’s the lowest since 2014-15 and compares with the government’s estimate for record 96.6 million tonnes this season. Imports in 2017-18 may total two million tonnes, the second highest level in 11 years, the survey shows.

India scrapped its import duty in December and has been purchasing high-protein grain from Australia, Russia and Ukraine after El Nino-linked drought cut production. It’s been a bright spot for global prices in a world with record reserves as the country typically produces enough to match consumption. Stockpiles at state warehouses totaled 11.53 million tonnes in February, down 43 per cent from a year earlier, according to state-run Food Corp. “To refill and replenish stocks the government will procure as much as they can from the domestic market,” said Indrajit Paul, a grain analyst with Cofco Agri Ltd. Even if India were to raise its import duty to 25 per cent from zero, private buyers may seek imports, he said.

“Imports will happen mainly to fulfill needs of millers in South India. Most of the imports next season are expected to come from Australia.”