India’s wheat crop is much smaller than the official government forecast according to a survey of analysts and traders.
The survey lends weight to the idea that the winter pulse crop will also be smaller than the official government forecast.
A Reuters poll pegged India’s wheat output at 85 million tonnes for 2016, reflecting the impact of back-to-back drought years and rain near the end of the growing season.
That is about 8.8 million tonnes below the government’s estimate of 93.82 million tonnes. Last year the crop was 86.53 million tonnes, as the winter crop also struggled with dry conditions through most of the growing season and then rain at harvest.
“The trend yield is not going to be reached after the dry, hot conditions at the start of the season and then rains at the end of the cycle, which have raised a serious question mark over the quality of the crop that will be harvested,” analyst Gabriel Omnes from French consultancy Strategie Grains told Reuters.
A clearer picture of the Indian crop size will emerge once the harvest winds up next month, following which the country may abolish its 25 percent tax on wheat imports, traders and analysts polled by Reuters said.
“It is becoming increasingly clear that India will have a sharp reduction in its crop, while steady economic growth is increasing spending power and demand,” said a German trader.
“I expect a change in trade patterns from July, with the Indian government likely to end wheat import duties to allow wheat to come in.”
The survey did not have a number for winter pulse production. The government’s official forecast for the winter pulse crop is 11.97 million tonnes, up slightly from last year’s 11.42 million, but down from 13.25 million two years ago.
The next government forecast is expected the first week of May.
With smaller domestic wheat production imports are likely to reach 2.75 million tonnes in the year to June 2017, according to the survey of 11 analysts and traders. Imports would have been even higher, but surplus stocks from a series of bumper harvests since 2007 are expected to help pick up some of the slack in output, they said.
The U.S. Department of Agriculture forecasts India’s wheat year end stocks will dwindle to 17.2 million tonnes in 2015-16 from a record 24.2 million tonnes two years ago.
At 2.75 million tonnes, India’s wheat imports would be the most since 6.7 million tonnes in 2006-07. It imported only 500,000 tonnes last year, USDA data shows.
The highest estimate for imports in the Reuters survey was 4.5 million tonnes, while the lowest output forecast was 82 million tonnes.
“The weather condition will play an important role in the coming weeks,” said Anil Monga, managing director of Emmsons, a top New Delhi-based trader.
“If temperatures rise further in the next few days, let’s be ready to see a sharply lower yield.
The waning of El Nino combined with warm water in the Indian Ocean is expected to cause the 2016 summer monsoon to deliver above normal rain over the next growing season, although some forecasters believe the moisture will be weighted toward the back end of the monsoon, with the early weeks drier than normal.
