Wheat imports seen surging 40% on winter crop stress
London/New Delhi: India’s wheat imports are set to surge as lower plantings and poor rain threaten output in the world’s biggest grower after China.
Imports may total 3.5 million metric tons in the year from 1 April, according to the median estimate of eight traders and analysts surveyed by Bloomberg. That compares with the US Department of Agriculture’s estimate of 2.5 million tons for 2017-18. Output is seen falling to a three-year low of 92 million tons in 2017-18 from 98.4 million tons estimated by the government for 2016-17.
Key to the forecast will be any change to India’s 20% import duty after speculation since late 2017 that the government could increase it. The country is not a regular buyer of large quantities as output broadly matches demand. It bought 5.9 million tons in 2016-17 after two straight years of drought, with imports in 2018-19 seen the second-highest in 12 years.
Traditional sellers, including Australia and the Black Sea region, may benefit from the extra demand, supporting prices that posted their biggest monthly gain since June last month.
“There are no rains in the core wheat belt and high temperatures are not going to help the crop,” said Prashant Sarnaik, India production lead at Cofco International Ltd. The market participants are expecting 3 to 4 million tons of imports next year, however, overseas purchases could even climb to 5 million tons because of a bleak crop outlook and tightening domestic stocks, he said.
The area under wheat, India’s biggest winter-sown food grain crop, was estimated at 30.1 million hectares (74 million acres) by 2 February, compared with 31.8 million hectares a year earlier, according to the farm ministry. Harvesting generally begins in March.
“As of now, weather has not been very conducive in some main wheat growing areas,” said K.K. Singh, head of Agromet division of India Meteorological Department. “If weather turns normal after 15 February, then there won’t be any adverse impact on the crop.”
The intensity of the showers will also be crucial for yields, Cofco’s Sarnaik said. “If we get light rains, it will benefit the crop. But if rains are moderate to heavy and are coupled with winsdstorms and hailstorms, then it could hurt the crop and lead to crop lodging.” Bloomberg