Wheat output expected to fall further

Flour millers want import duty exemption

Wheat output in India is expected to decline this year, with less sowing and the likelihood of less yield due to adverse climate in the rabi season.

The Union agriculture ministry says sowing as of January 28 was on 29.25 million hectares, down 4.4 per cent from a year before. And, less of soil moisture, due to less rain in the monsoon, would mean less germination of pods. Beside, a warmer winter would affect growth of bulbs in the standing crop.

“We estimate a sizable decline in output but there is no need to ring alarm bells at this point, as productivity might recover with resurgence in cold,” said Veena Sharma, executive secretary, Roller Flour Millers Federation of India.

Even a five per cent decline in output would mean the lowest since 2009-10. The ministry’s fourth advance estimate was of wheat output at 88.94 million tonnes for 2014-15, down from the all-time record of 95.85 mt in 2013-14. The government’s target for the current year is six per cent higher than the reduced 2015 crop. Less irrigation supply in the main reservoirs had delayed planting.

“A second straight year of decline in output will be the first one in four decades and we might have to undertake record imports,” said Ritesh Jain, chief investment officer, Tata Asset Management.

Stock with the Food Corporation of India is 20.3 mt, a four-year low.

Amid expectation of a price rise, flour millers have urged the government to exempt wheat from import duty or lower it to the earlier level of 10 per cent from the current 25 per cent, revised last year.

The price for delivery in March on the Chicago Board of Trade fell to $4.55 a bushel on Tuesday, the lowest level for the most active contract since June 2010. Wheat futures for delivery in the near month was traded at Rs 1,598 a quintal on the benchmark National Commodity & Derivatives Exchange on Wednesday.