One production forecast is for 80 million tonnes, down from 95.9 last year
India’s wheat crop is in trouble but it is next year’s crop that really intrigues Bruce Burnett, CWB’s weather and crops specialist.
Weather forecasters are in agreement that El Nino has arrived and that likely means a second consecutive year of disappointing monsoon rains for the world’s second largest wheat producing nation.
“To have (India) have a short crop two years in a row, that’s when you could probably see some impact on the global market,” said Burnett.
“Certainly that’s an interesting scenario to contemplate.”
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The India Meteorological Department is forecasting below-average monsoon rains. If that happens there could be dire consequences for one of the world’s largest grain producers, according to AccuWeather.
“While there will be some rainfall in the region the pattern could evolve into significant drought and negatively impact agriculture from central India to much of Pakistan,” AccuWeather senior meteorologist Jason Nicholls said in a news release.
India’s 2015-16 wheat crop, now being harvested is a disappointment. The U.S. Department of Agriculture is forecasting 90 million tonnes of production, down from the record 95.9 million tonnes harvested last year.
Others expect a far worse outcome. Pravin Dongre, chair of the India Pulses and Grains Association, is quoted in a Bloomberg article forecasting 80 million tonnes, the smallest wheat crop since 2008.
Burnett thinks it will be somewhere in between. It will also be a poor quality crop due to excessive March rains.
“The rains came at the wrong time and caused quite a bit of harvest damage in terms of quality,” he said.
Burnett said the upshot is that India, which had become a wheat exporter the last couple of years, will likely import one million tonnes of good quality milling wheat from Australia and possibly Canada.
That is not enough to bolster wheat prices considering the U.S. Department of Agriculture is forecasting 203 million tonnes of world carryout.
But if El Nino results in poor wheat crops in India and Australia next year that would be bullish for prices largely because India will have consumed much of its huge government owned stockpiles of wheat by then.
“We’re going to cut into those stocks pretty significantly this year,” said Burnett.
Markets will know by mid-September how much rain fell in India during the monsoon season. The monsoon sets up the winter growing season, when the wheat crop is sown.
Russia’s wheat yields were also threatened but that situation appears to have been resolved.
There were concerns the crop was wilting in the fields due to a May heat wave but weekend rains provided relief to crops in southern Russia, which is the key production area for Black Sea exports.
Russia’s crop got off to a dismal start due to dry conditions but timely rains later in the growing season helped restore production prospects, which appear to be intact thanks to the weekend rains.
The USDA is forecasting 53.5 million tonnes of Russian wheat production, which would be higher than the previous five-year average of 49.3 million tonnes.
Burnett agreed that Russian growers are likely about to harvest an above-average crop, which means there should be strong export potential out of that region.
