Report Highlights:

Post's MY 2015/16 milled rice production forecast has been lowered to 100 million metric tons (MMT) on lower yields due to below normal 2015 monsoon. MY 2015/16 corn production forecast is also revised lower on reported lower yields in the major growing states. Consumption, exports and ending stocks have been revised lower due to expected tight domestic supplies for rice and corn.

General Information:

MSP for Rabi Crops Raised

On November 16, 2015, the government announced the minimum support price (MSP) for rabi (winter planted) crops for the Indian crop year (ICY) 2015/16 (July-June), which will be marketed in MY 2016/17.

India: GOI's Minimum Support Prices (MSP) for Rabi Crops in Indian Crop Year

Commodity

MSP for 2014-15

(INR per Metric Tons)

MSP for 2015-16

(INR per Metric Tons)

Wheat

14,500

15,250

Barley

11,500

12,250

Chickpea

31,750

35,000*

Lentil

30,750

34,000*

Rapeseed/Mustard

31,000

33,500

Safflower

30,500

33,000

*- Includes a bonus of INR 750/MT over and above the MSP announced for this season. Source: Ministry of Agriculture and Farmer's Welfare, Government of India (GOI).

Typically, the government undertakes MSP procurement operation in rice and wheat, and rarely undertakes MSP procurement operations for pulses, oilseeds and other crops. The MSP for wheat and barley has been raised by about 5 percent over last year, while MSPs for pulses (chickpea and lentil) have been raised by more than 10 percent and for oilseed by over 8 percent over last year's MSPs. Although the support prices for pulse and oilseed crops have been raised higher than wheat, there may not be a major shift in area from wheat to other crops as wheat offers relatively stable yields and an assured government procurement system vis-a-vis pulse/oilseed crops. Given the relatively dry planting conditions (soil moisture and inadequate irrigation water availability) due to below normal 2015 monsoon coupled with high open market prices of pulses, farmers are likely to increase planting of pulses away from wheat in the semi irrigated areas (without assured irrigation facilities).

Rabi Planting Begins on a Weak Note… Due to below normal 2015 monsoon and consequent relatively sub-optimal soil moisture conditions and inadequate irrigation water availability, planting in the ongoing 2015/16 rabi season for wheat, pulses (gram, lentils, Mung beans, and black eye beans), oilseeds (rapeseed & mustard, sunflower, safflower) is significantly behind last year, while planting of coarse grains (corn, barley, sorghum) is up from last year.

India: Planting of Rabi Crops in Indian Crop Year (Area in Million Hectares)

Crop

ICY 2015/16 Planting from

Oct 1 thru Nov 27, 2015

ICY 2014/15 Planting from

Oct 1 thru Nov 27, 2014

Wheat

11.73

16.16

Pulses

9.09

9.78

Coarse cereals

4.44

3.75

Oilseeds

5.71

6.57

Rice

0.83

1.01

Total

31.80

37.26

Rabi planting is in progress in most of the growing states and is likely to continue through end December. Agriculture experts and field sources expect higher planting of coarse grains and pulses and lower planting of wheat compared to last year due to relatively dry planting conditions.

RICE

Commodity, Rice Milled, PSD

(Area in Thousand Hectares, Quantity in Thousand Metric Tons, Yield in MT/Hectare)

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

India

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

44,136

44,136

43,000

43,000

43,200

43,000

Beginning Stocks

25,440

25,440

22,757

22,757

17,660

17,590

Milled Production

106,646

106,646

104,800

104,800

103,500

100,000

Rough Production

159,985

159,985

157,216

157,216

155,266

150,015

Milling Rate (.9999)

6,666

6,666

6,666

6,666

6,666

6,666

MY Imports

0

0

0

0

0

0

TY Imports

0

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

132,086

132,086

127,557

127,557

121,160

117,590

MY Exports

10,149

10,149

11,800

11,870

9,000

8,000

TY Exports

10,907

10,907

11,500

11,500

9,500

8,000

Consumption and Residual

99,180

99,180

98,097

98,097

99,000

98,000

Ending Stocks

22,757

22,757

17,660

17,590

13,160

11,590

Total Distribution

132,086

132,086

127,557

127,557

121,160

117,590

Yield (Rough)

3.6248

3.6248

3.6562

3.6562

3.5941

3.4887

MY 2015/16 Production Lowered

Post's MY 2015/16 milled rice production forecast has been lowered to 100 million metric tons (MMT) on reported lower yields in several growing states due to poor 2015 monsoon and losses due to recent rains in southern India damaging the standing rice crop.

The kharif (fall harvested) rice harvest is almost over, excepting for some late-sown rice in the eastern and southern states. Although the official crop cutting yield reports are likely to be available by early January, market sources report lower yields due to moisture stress at critical crop growth and maturity stages in most of the growing states, except the irrigated northern states of Punjab, Haryana and West Uttar Pradesh. Several states have declared large number of their administrative districts drought affected (monsoon rains less than 20 percent of normal), and the central government is in the process of assessing the damages in the drought affected areas. Recent heavy rains in the coastal belt of Andhra Pradesh and Tamil Nadu have caused significant damage to the rice crop, which was at maturity and harvest stage.

Although no official assessment of crop loss is available due to drought or recent rains is available, market sources report kharif rice crop loss of around 5-8 MMT in the affected area. Crop losses in these states are likely to be partially offset by higher production in the northern states as reflected by higher procurement. Planting of rabi (winter planted) rice, mostly confined to West Bengal and southern states, has started and will continue through December. Planting of rabi rice is likely to be lower than last year on lower water levels in irrigation reservoirs, particularly in the southern states. Consequently, MY 2015/16 rice production is revised lower to 100 MMT compared to the earlier forecast of 103 MMT.

Government Procurement Ahead of Last Year

Government procurement of MY 2015/16 rice under the minimum support price (MSP) continues to be ahead of last year due to the timely harvest (last year delayed due to October rains) and good harvest from the irrigated northern states. Government procurement through November 30, 2015, is estimated at 13.87MMT compared to 10.64 MMT during the corresponding period of MY 2014/15.

Procurement in the northern states is almost over, but will gradually spread to other parts of the country as harvest progresses. Market sources report that the government's MSP (INR 14,100/MT for common paddy rice) is currently slightly above the open market price of unmilled paddy rice, but the market prices have started firming up in the drought affected states, which may affect government procurement in these states. Consequently, market sources expect procurement during the MY 2015/16 to be lower at around 30 MMT compared to last year's procurement of 32.2 MMT.

Prices Firm

Despite relatively strong early season market arrivals, domestic prices marginally firmed up in November on reports of lower yields due to drought conditions in major states.

Prices during the marketing year will largely depend on the domestic crop harvest and export demand.

Export

Post's MY 2014/15 export estimate is raised marginally higher to a record 11.87 MMT based on the preliminary official statistics for October 2014 to September 2015.

India's rice export during the first 9 months of CY 2015 is estimated at 8.8 MMT compared to 7.8

MMT during the corresponding period last year. Assuming no significant change in the domestic prices and export demand, Post continues to estimate CY 2015 exports at a record 11.5 MMT. However, MY 2015/16 and CY 2016 rice exports are forecast lower at 8.0 MMT on forecast tight domestic supplies.

Consumption/Ending Stocks

MY 2015/16 consumption and ending stocks have been lowered to 98.0 MMT and 11.6 MMT, respectively on forecast tight domestic supplies. MY 2014/15 ending stocks has been revised marginally lower to 17.6 MMT to account for the higher exports during the marketing season.

CORN

India: Commodity, Corn, PSD

(Area in Thousand Hectares, Quantity in Thousand Metric Tons, Yield in MT/Hectare)

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Nov 2013

Nov 2014

Nov 2015

India

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

9,066

9,066

9,300

9,300

9,200

9,300

Beginning Stocks

633

633

1,428

1,428

2,008

2,008

Production

24,259

24,259

23,670

23,670

22,500

21,000

MY Imports

7

7

10

10

50

50

TY Imports

11

11

10

10

50

50

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

24,899

24,899

25,108

25,108

24,558

23,058

MY Exports

3,871

3,871

1,100

1,100

1,500

1,000

TY Exports

3,889

3,889

1,100

1,100

1,500

1,000

Feed and Residual

10,600

10,600

12,500

12,500

12,800

12,200

FSI Consumption

9,000

9,000

9,500

9,500

9,500

9,200

Total Consumption

19,600

19,600

22,000

22,000

22,300

21,400

Ending Stocks

1,428

1,428

2,008

2,008

758

658

Total Distribution

24,899

24,899

25,108

25,108

24,558

23,058

Yield

2.6758

2.6758

2.5452

2.5452

2.4457

2.2581

Production Lowered

MY 2015/16 corn production forecast is revised lower to 21.0 MMT on reports of lower than anticipated yields in the major growing states of Maharashtra, Karnataka, Telangana, Andhra Pradesh and Gujarat which face drought like conditions in most parts due to second consecutive below normal monsoon.

With the corn crop largely unirrigated, the prolonged dry spell in August-September significantly affected the yields, which are reportedly down by over 20 percent in these states. Market sources report that kharif corn production to decline by 2- 3 MMT over last year (16.4 MMT). While the planting for rabi corn is likely to be higher than last year, continued dry conditions (soil moisture and irrigation water availability) is likely to affect the overall yields. Consequently, MY 2015/16 production is forecast lower at 21 MMT, which includes 14 MMT kharif corn and 7 MMT rabi corn.

Prices Escalate

Despite record opening stocks and weak export demand, domestic corn prices firmed up in October-November strongly with the November prices near record suggesting significantly lower crop from the last year's record harvest.

Average market prices in the major producing states in the month of November ranged from INR 13,000 ($200) to INR 14,750 ($227) per metric ton. Prices are expected to remain stable in December and the future prices during the season will largely depend on the rabi corn production and international demand.

Consumption Lowered

MY 2015/16 consumption forecast is revised lower to 21.4 MMT on forecast tight domestic supplies, expected firm domestic prices and relatively stagnant growth in the consuming sectors (poultry feed and starch).

Exports Lowered

MY 2015/16 export forecast is revised lower to 1.0 MMT on continued weak export demand and relatively tight domestic supplies.

Market sources report that the firm domestic prices and weak international prices have rendered Indian corn exports unviable and are unlikely to improve unless the international prices gain significantly. Assuming no significant change in the relative prices of Indian corn vis-a-vis corn from other origins and continued exports to neighboring countries and containerized exports to traditional south Asian markets, MY 2015/16 exports are forecast lower at 1.0 MMT from the earlier forecast of 1.5 MMT.

WHEAT

Wheat Planting Falter

The Government's progressive rabi planting report shows that planting of wheat through November 27, 2015 is only 11.7 million hectares, down 27 percent from the last year's planting at the same time due to inadequate soil moisture and irrigation water availability. Although late October through November is considered the optimal planting time for wheat, planting typically continues through December in many states. Recent reports suggest that wheat planting has picked up in most states with farmers augmenting soil moisture through irrigation. However, Post expects 2015 wheat acreage to decline around 28 million hectares from the last year's record acreage of 30.6 million hectares. However, production will largely depend on winter rains (December/January) and temperatures during the critical crop growth stages like flowering/grain filling (February) and at the time of harvest.