(Adds rice output forecast in 12th paragraph.)
June 14 (Bloomberg) -- Wheat production in India, the world’s second-biggest grower, may advance to a record for a fourth year, potentially spurring the government to ease exports curbs and halting a rally in global prices.
Output may climb 6.4 percent to 86 million metric tons in the year ending June 30 from 80.8 million tons a year earlier, P.K. Basu, Agriculture Secretary, said in an interview yesterday in New Delhi. That’s 2 percent more than the farm ministry’s April 6 estimate of 84.3 million tons.
A bumper harvest may help the government end a four-year ban on wheat exports, potentially cooling a 65 percent rally in prices in Chicago in the past year that partly pushed global food costs to a record in February. The Standard & Poor’s GSCI Agriculture Index has surged 70 percent in the past year as dry weather in Europe and China and floods in the U.S. eroded prospects for corn, wheat and soybean crops.
“If India allows exports that will increase wheat supply to the global market and be bearish for prices,” Erin FitzPatrick, a commodities analyst at Rabobank International in London, said in a phone interview yesterday.
World wheat production is projected at 664.3 million tons, the U.S. Department of Agriculture said on June 9, down from 669.6 million tons estimated in May. Global inventories may total 184.3 million tons before the 2012 harvests in the Northern Hemisphere, compared with 187.1 million tons a year earlier, according to the USDA.
Higher than expected grain output in India, the world’s second-biggest consumer of rice and wheat, will cool rising food inflation in Asia’s third-biggest economy. An index measuring wholesale prices of agricultural products advanced 9.01 percent in the week ended May 28 from a year earlier, the highest level in eight weeks, the trade ministry said June 9.
“This is an unprecedented production and the bountiful harvest will not allow local prices to go up at all,” M.K. Dattaraj, former president of the Roller Flour Millers Federation of India, said by phone from Bangalore. “This will help the government ensure food security in the country. Wheat will contribute lesser inflation in the food basket.”
India banned shipments of wheat in early 2007 and non- basmati rice in April 2008 to bolster domestic supplies amid a global food crisis. State reserves of food grains totaled 65.6 million tons on June 1, almost triple the quantity five years ago, according to the Food Corp. of India.
Wheat for September delivery dropped as much as 0.7 percent to $7.7075 a bushel on the Chicago Board of Trade.
India’s lentils output may climb to a record 18 million tons in the year ending June 30, from 14.7 million tons a year earlier, Basu said. That’s higher than farm ministry’s April 6 forecast of 17.3 million tons.
The country will announce the so-called fourth advance estimate of the production of food grains from rice to corn by July, which will include the revised wheat and lentils projections, according to the farm ministry. Output may climb 8 percent to a record 235.88 million tons this year, the ministry said April 6.
Rice production in the 2011-12 crop season may jump 8.3 percent to 102 million tons from 94.1 million tons this year as an increase in the guaranteed prices for the crop paid to farmers to a record and normal rain boost planting, Basu said.
The government on June 9 increased the minimum purchase price of the so-called common variety of raw rice to an all-time high of 1,080 rupees ($24) per 100 kilograms (220 pounds), from 1,000 rupees a year earlier.
Monsoon, which accounts for more than 70 percent of India’s rainfall, may be 98 percent of the average, a level deemed normal, the Indian Meteorological Department said in April.
--Editors: Thomas Kutty Abraham, James Poole
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