India's 2019 wheat output could fall from record on scanty rains

By Rajendra Jadhav

SEHORE, India (Reuters) - India's wheat production could fall in 2019 from record output this year as lower moisture levels and higher temperatures in key growing regions are threatening yields of the winter-sown crop, farmers and analysts told Reuters.

A drop in output could lift local wheat prices and force the world's second-biggest producer to reduce import taxes on the grain to augment supply. Higher imports from India could support global wheat prices, while a local price increase could calm angry farmers in northern India.

"Instead of six acres, I planted wheat on three acres and chickpeas on the remaining area as tube wells are not pumping enough water," said Mukesh Mandloi, a farmer from Sehore in the central state of Madhya Pradesh.

Wheat needs more water than chickpeas, a pulse crop.

Madhya Pradesh and the northern state of Uttar Pradesh are India's top two wheat-producing states, accounting for more than 45 percent of the country's total output.

These two states received nearly a tenth less rainfall than normal during the June-September monsoon season.

Besides water scarcity, higher temperature are also hindering growth of the crop, said farmer Pavan Verma, who was irrigating wheat planted on 11 acres.

Only one wheat crop is grown in India each year, with planting starting in late October and harvesting in March.

Farmers have planted wheat on 15.3 million hectares as of Nov. 30, down from 15.7 million hectares last year.

Wheat production will fall in 2019 as scanty rains have curtailed water supplies in canals in Uttar Pradesh, Madhya Pradesh and the western state of Gujarat, said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities in Mumbai.

"It is difficult to estimate the exact drop in production as it also depends on temperature," Galipelli said.

India harvested a record 99.70 million tonnes of wheat in the crop year to June 2018.

Local wheat prices have risen more than 15 percent in the last five months on the low rainfall levels and as depreciation in the rupee made imports more expensive.

The price rise could prompt the government to release stocks from its warehouses, said one Mumbai-based dealer with a global trading firm.

Government wheat stocks stood at 33.14 million tonnes as of Nov. 1, up 39 percent from a year ago.

The government could allow another 10 percent rise in prices to please farmers, but if prices rise above 2,200 rupees a tonne then it may cut import taxes to protect urban consumers, the dealer said.

Even with recent the price increases, farmers have been frustrated this year over the more rapid increase in the cost of fertilizers and diesel.

Indian flour millers imported 1.65 million tonnes of wheat in the 2017/18 fiscal year, down from 5.7 million tonnes the previous year, mainly from Australia, Russia and Ukraine.

(Reporting by Rajendra Jadhav; Editing by Tom Hogue)