29-03-2017

India’s Wheat Imports Seen Remaining Near Decade High, ITC Says

Wheat

India’s wheat imports are likely to remain near the highest in a decade as the world’s second-biggest producer seeks to replenish stockpiles slashed by El Nino-induced drought, according to one of the nation’s largest buyers.

Imports may reach 3 million metric tons in 2017-18, S. Sivakumar, the chief executive officer of ITC Ltd.’s agriculture business division, said in an interview. That would be the second-highest level in the past decade, although down from estimates for 5.5 million tons in 2016-17.

India is seeking to rebuild stockpiles that likely plunged 44 percent in March from a year earlier to 9.43 million tons, according to state-run Food Corp. India has been purchasing high-protein grain from Australia, Russia and Ukraine. The world’s second-biggest consumer of wheat on Tuesday imposed a 10 percent duty on imports after scrapping the tax in December.

“Low stocks mean imports,” said Sivakumar, who last year predicted both the jump in imports and the duty reduction. “It makes sense for the south Indian mills to import while the government should keep buying in northern India. That’s how they can protect consumers as well as farmers. Overall the supply and demand should be balanced.”

This year’s harvest, which began mid-March, is likely to rise to 95 million tons, and may reach as high as 96 million tons if the weather is good, Sivakumar said. That compares with the government’s estimate for record 96.6 million tons. Sivakumar’s estimate for imports includes 1 million tons contracted this year.

The government is seeking to buy 33 million tons from the crop, up 44 percent from a year earlier, the Food Ministry said on Feb. 15. Indian wheat futures have fallen 22 percent from the record closing high of 2,118 rupees per 100 kilograms reached in November last year. Local prices are currently higher than the government’s minimum purchase price.

India’s wheat imports in the year ending March 31 may total 5.5 million tons according to the U.S. Department of Agriculture. India’s Food Ministry has said they may be higher.

Source: Bloomberg

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