India Wheat: Private Trade Will Be Less Active
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India’s Wheat production is forecast at 108 million metric tons (MMT), resulting from 32 million hectares in (MY) 2023/2024 (April-March), according to FAS New Delhi (Post). This represents significantly better crop performance than the MY 2022/2023 harvest of 100 MMT from 30.5 million hectares. Favorable weather conditions and sufficient soil moisture from planting through the vegetative/reproductive stages resulted in record planting levels.
Wheat crop is on track to see excellent performance in the upcoming market year. The crop benefits from favorable weather conditions holding steady throughout the country’s Wheat-growing areas. Advantageous weather sustained record plantings in November 2022 while promoting good crop development during the growing season. Despite higher temperatures shooting up starting the second week of February 2023, the upcoming Wheat crop continues progressing well, thanks to relatively low night temperatures. Post foresees much higher yields this harvest season than those resulting from the MY 2022/2023 terminal heat-stressed crop.
Farmers are also mitigating high daytime temperature stress with light irrigation. However, should normal weather conditions slip, production numbers could falter if there is a round of extreme weather events, including temperature increases or even untimely rains closer to the harvest time (from April to early May). Adequate precipitation during the second half of the 2022 monsoon and its timely withdrawal contributed to ideal Wheat planting conditions from October to November in the principal Wheat production states.
FAS New Delhi forecasts MY 2023/2024 yields higher at 3.4 MT/hectare compared to last year’s 3.3 MT/hectare, but still lower than the previous record of 3.5 MT/hectare set in MY 2019/2020.2 Due to last year’s heat stress singeing of the Wheat crop at harvest time, farmers this time around pursued more timely plantings, that benefited from adequate soil moisture conditions. The onset of winter’s lower temperatures in the second week of November 2022 and good irrigation water availability supported the Wheat crop during its critical growth stages (i.e., vegetative growth, tillering, flowering, and panicle initiation).
Indian Government’s Wheat Procurement
With the Indian Government’s Wheat procurement having faltered in MY 2022/2023, the Government has raised its minimum support prices (MSP) by 5.5 percent over last year’s to Indian rupees (INR) 21,250 ($260) per metric ton (MT), which was meant to encourage higher plantings. Unusually strong Wheat prices in MY 2022/2023 persuaded farmers to plant Wheat in the rabi (winter-planted) season with a marginal shift of pulses and coarse grain acreage to Wheat.
A lower harvest coupled with relatively domestic solid prices (partially fueled by high global prices) resulted in the Indian Governments Wheat procurement in MY 2022/2023 declining to 18.8 MMT. This volume is less than half of the previous year’s procurement volume of 43.3 MMT (record high). With the rollout of an official forecast of a bumper harvest and the likely continuation of the export ban on Wheat and Wheat products, the Indian Government is signaling its intent to bolster its MY 2023/2024 MSP Wheat procurement. Reports indicate that the Government aims to procure some 34.2 MMT of Wheat this upcoming MSP season.
Recently Wheat prices have cooled. Prices have softened in no small measure due to the Indian Government’s decision to release 5 MMT of Wheat to the private trade in February-March 2023. The 5 MMT of Wheat was released at highly subsidized prices, followed by the announcement of fixed reserve prices falling around those of the MSP level for sales under the OMSS in MY 2023/2024. Post anticipates that the private trade will be less active, even sidelined, in the market during this upcoming harvest/marketing season (April-July). According to AgFlow data, India imported 76,467 tons of Wheat from Australia in Q1 2023.
Other sources: USDA
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