India to buy US wheat after 15-yr gap

India, the world's second-biggest wheat consumer, may resume imports of the grain from the US after 15 years to build reserves as demand exceeds production.

India last week invited offers for 1 million tonnes, one-third of this year's target. Differences over quality norms prevented US growers from selling to the south Asian nation for more than a decade, according to the US Wheat Associates.

"I'm not ruling out that possibility,'' T Nanda Kumar, federal food secretary said yesterday in a phone interview from New Delhi. "Rules won't be changed, but I think there will be a way of resolving that (quality) problem.''

Resumption of wheat supplies to India may boost shipments for companies including Cargill and Archer Daniels Midland. Cargill bought the grain from other countries last year to supply India after the south Asian nation barred cargoes with weed seeds, according to Mark Samson, vice president for South Asia at the US Wheat Associates, a growers' lobby.

India is buying wheat for a second year to build reserves and may purchase as much as 5 million tonnes this year, according to Alok Sinha, chairman and managing director of Food Corporation of India. The nation bought 6.5 million tonnes last year, the first time it imported wheat in seven years.

"Allowing US wheat will give the government one more option to choose from at a time when global wheat production is falling," Siddharth Agarwal, director at R Payrelal Import & Export, said by phone from Kolkata. The company imported 150,000 tonnes last year and has contracted to buy 10,000 tonnes from Pakistan this year.

The government is waiting to assess the size of purchases from domestic farmers before inviting bids to buy more wheat.

"We will decide on importing more only after assessing the final procurement numbers and when cargoes from the first tender come in," Kumar said. Traders may be allowed to offer US wheat in future tenders, he said.

Wheat purchases by the government reached 8.81 million tonnes this year, compared with 9.11 million tonnes a year earlier, the food ministry said yesterday. The government plans to buy 15.15 million tonnes this year, up from 9.23 million tonnes last year, junior food minister Akilesh Prasad Singh said March 2.

"We should be able to reach 12 million tonnes," Kumar said. "We will slowly but surely reach that figure."

The shortfall won't leave the government with insufficient stockpiles of the grain to distribute to the nation's poor and for its food-for-work programs because of an increase in output, Kumar said.

India is forecast to produce 73.7 million tonnes of wheat this year compared with 69.35 million tonnes a year earlier.

Wheat futures for July delivery fell 1.8 per cent to $4.8475 a bushel in after-hours trading on the Chicago Board of Trade at 3:41pm Mumbai time.

Prices have risen 30 per cent in the past year as bad weather damaged crops from the US to Australia.