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India raises wheat output estimate but local prices surge

MUMBAI: India raised its wheat production estimate on Wednesday even as other forecasters and traders were scaling down output numbers because of a heatwave.

The world’s second biggest grains producer harvested 106.84 million tonnes of wheat in 2022, slightly higher than the previous estimate of 106.41 million tonnes, the government said in its latest estimate released by the farm ministry.

The US Department of Agriculture’s Foreign Agricultural Service has pegged India’s production at 99 million tonnes, while traders estimated output fell to as low as 95 million tonnes because of the heatwave.

Local wheat prices jumped to a record 24,309 Indian rupees ($306) per tonne on Wednesday.

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That was up nearly 15% from recent lows that followed the government’s surprise ban on exports on May 14, ending hopes that India could fill the market gap left by missing Ukraine grain.

The government’s lower wheat procurement and rising local prices are indicating a sharp drop in production, said a Mumbai-based dealer with a global trading firm.

“Its very difficult to believe in the government number of 106.84 million tonnes. Production could be around 95 million tonnes,” he said. India’s wheat procurement fell 57% from a year ago to 18.8 million tonnes.

The south Asian country could scrap a 40% duty on wheat imports and cap the amount of stocks traders can hold to try to dampen record high domestic prices, government and trade officials said last week.

India also on Wednesday raised its rice production estimate for 2021/22 crop to 130.29 million tonnes from 129.66 million tonnes.

India raises wheat output estimate but local prices surge

Source: Brecorder

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