Wheat carryover stock to rise 140% this year

India’s wheat carryover stock may rise 140 per cent in the next financial year on favourable climate leading to a near bumper crop estimates during the ensuing rabi season.

According to the United States Department of Agriculture (USDA), the country’s carryover inventory is estimated to swell up to 13.91 million tonnes as on April 1, 2010 compared with 5.8 million tonnes last year. The agriculture ministry had earlier estimated the output to be around 77.5 million tonnes during the 2009-10 rabi season as compared with a record 78.6 million tonnes in the previous season.

Apparently, the ban on wheat exports until March 2010 ensured adequate domestic availability. The government had imposed a ban on wheat exports and its products in 2007 which was further extended to March 2010.

The excess stock may necessitate India to allow the export of foodgrain, for which the Food and Agriculture Organisation (FAO) has been advocating since the past two years. Though, the sowing has started in agriculturally advanced states including Punjab and Haryana, yet analysts forecast current year’s output to be around the same level as last year.

“Since sowing has just begun which will continue till December, the acreage is unknown. Therefore, it is premature to forecast the output for this season,” said V K Chaturvedi, managing director of Usher Agro, a company engaged in processing of paddy and wheat.

Meanwhile, wheat contracts for near-month delivery on the National Commodity and Derivatives Exchange (NCDEX) rose 8.6 per cent in the last one month and 13.24 per cent since September 1. The volume is yet to pick after five months of the commodity’s relaunch at the futures platform which R Ramaseshan, managing director of NCDEX attributes to frequent government interventions.

While unveiling Commodity Insights Yearbook 2009, first of the annual book on commodities, V Shunmugam, chief economist of MCX said, “Information on commodities that constantly flows in and out of commodity markets remains the key driver of the price discovery and risk management process for which they were brought into the Indian economy.” Farmers can only benefit through the free flow of information about crop prospects, rainfall scenario, climate change and commodity’s price movements in the previous season which will help them decide sowing for the next season, he added.

Launching India Commodity Yearbook 2009, an annual book on commodities, Sanjay Kaul, managing director and CEO of National Collateral Management Services (NCMSL), and NCDEX-linked collateral manager, said, “Wheat stocks will rise further to 16.91 million tonnes if the current year’s output meets the estimate at 77.5 million tonnes.”

The latest Kotak Commodity Services’s report forecast wheat to remain firm on good demand from spot market.