Report Highlights:

MY 2015/16 wheat production is estimated lower at 87 million metric tons (MMT) based on preliminary harvest reports from producing states. MY 2015/16 wheat imports are forecast higher at 1.0 MMT to augment quality wheat requirement.

General Information:

Government Lowers Indian Crop Year 2014/15 Grain Production

The Ministry of Agriculture's (MOA) Third Advance Estimate of Production of Food Grains for the Indian Crop Year (ICY) 2014/15 (July/June) lowers grain production to 251.1 million metric tons (MMT) compared to 257.1 MMT estimated in the Second Advance Estimate released in February 2015, and about 14 MMT lower than the last year's (ICY 2013/14) record harvest. The ICY 2014/15 grain production estimate includes rice, coarse grains and pulse crops harvested last fall (kharif crop) and this spring (rabi crop), as well as the wheat and barley (rabi crop) harvested in March-May 2015. The government has attributed the production decline to poor 2014 monsoon and unseasonal rains and hailstorm during February-March resulting in decline production of most grains.

The government's third advance estimate for ICY 2014/15 grain production includes

  • MY 2014/15 rice (102.5 MMT vs. record 106.7 MMT last year), corn (22.7 MMT vs. record 24.3 MMT last year), sorghum (4.8 MMT vs. 5.5 MMT), and pulses (17.4 MMT vs. record 19.3 MMT last year).
  • MY 2015/16 wheat (90.8 MMT vs. record 95.9 MMT last year) and barley (1.6 MMT vs. record 1.8 MMT last year).

Market sources believe that the government estimate for wheat and corn is optimistic. Given that the third advance estimates are based on the crop survey conducted about 3-4 weeks before the harvest of the rabi crops, the crop loss due to abnormal rains and hailstorm during February through April have not been adequately factored into the latest MOA estimate. The MOA will further revise the ICY 2014/15 estimate in July (fourth advance estimate) using the latest available data from various state governments on acreage and yields (based on crop cutting experiments) for both kharif and rabi crops. However, the final estimates for the ICY 2014/15 are likely to be released by the end of CY 2015.

WHEAT

Wheat PSD (Area in thousand hectares, quantity in thousand metric tons, and yield in MT/hectares)

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Apr 2013

Apr 2014

Apr 2015

India

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

30,000

30,000

31,530

31,530

30,600

30,600

Beginning Stocks

24,200

24,200

17,830

17,830

16,500

17,200

Production

93,510

93,510

95,850

95,850

90,000

87,000

MY Imports

25

25

45

45

500

1,000

TY Imports

22

22

125

125

500

1,000

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

117,735

117,735

113,725

113,725

107,000

105,200

MY Exports

6,053

6,053

3,400

3,400

500

500

TY Exports

5,354

5,354

1,550

1,200

500

500

Feed and Residual

4,800

4,800

4,500

4,500

4,800

5,000

FSI Consumption

89,052

89,052

89,325

88,625

89,800

87,800

Total Consumption

93,852

93,852

93,825

93,125

94,600

92,800

Ending Stocks

17,830

17,830

16,500

17,200

11,900

11,900

Total Distribution

117,735

117,735

113,725

113,725

107,000

105,200

Yield

3.1170

3.1170

3.0400

3.0400

2.9412

2.8431

MY 2015/16 Production Decline on Adverse Weather….

Post estimates MY 2015/16 wheat production lower at 87 MMT based on the reports of lower yield realization due to untimely rains and hailstorms during March-April at the critical flowering, grain setting, maturity and harvest stages.

Post field trips to the major wheat growing states of Punjab, Haryana, Uttar Pradesh and Bihar and reports from other states point to production losses due to crop lodging, higher incidence of disease, lower grain setting and smaller kernel size. While the farmers and traders report significantly higher losses (10-25 percent), local agricultural scientists and experts and provisional harvest reports from various agricultural research institutions indicate 5-10 percent lower yield realizations compared to last year's record harvest in major states. The rain-affected new crop harvest in most states display significant quality problems like discoloration/loss of lustre (vitreousnous) of grains, higher percentage of shrunken/immature kernels, and spotted (fungal infected) grains compared to previous years. The industry estimates for the MY 2015/16 crop is currently ranging from 82 MMT to 88 MMT, significantly lower than the MOA's third advance estimate of 90.8 MMT. Market sources expect that the official estimate may be lowered after the provisional official crop cutting experiments from the states are available by end July. Based on the provisional information from various states, Post estimates MY 2015/16 wheat production at 87 MMT, about 9 percent lower than last year's record crop.

…. But Government Procurement Steady on Quality Relaxation

After a slow start in April due to delayed harvest and quality concerns, government procurement of wheat in the ongoing season gained pace from third week of April after the central government relaxed the quality specifications for procurement of wheat in various states. Despite the forecast lower production, government wheat procurement through May 28, 2015, was estimated at 26.8 MMT compared to 26.4 MMT during the same period last year.

Market arrivals suggest that the rain affected wheat is being off loaded by the farmers at the government procurement centers due to lower market purchase by local traders and processors on quality concerns. Market sources report that the new crop wheat affected by lustre loss (70-80 percent) will have to be off loaded by the government in the next 5 to 6 months to avoid storage losses (insect infestation, etc.). Consequently, lower purchase by private trade could also be driven by the expectation of subsidized sales of government wheat after the procurement ends in July. Sources report that the government has already issued instructions to distribute the current season wheat first and retain the previous year's (MY 2014/15 and MY 2013/14) wheat currently in storage.

With the government being the major buyer in the market, market prices in most states are currently around the government's procurement price (INR 14,500 per MT). Prices are likely to rise after the government procurement tapers off in June.

MY 2014/15 Ending Stocks Raised; Consumption Revised

MY 2014/15 ending stocks is estimated higher to 17.2 MMT based on the latest official estimate on government-held wheat stocks. MY 2014/15 consumption estimated has been revised marginally lower to 93.1 MMT to adjust the revision in the ending stocks. MY 2015/16 consumption is also revised lower to 92.8 MMT on forecast tight domestic supplies.

MY 2015/16 Imports Raised

MY 2015/16 wheat imports are forecast higher at 1.0 MMT to augment forecast lower domestic production and lower quality of the MY 2015/16 wheat. Market sources report that by the third week of May, local millers have contracted about 350-400,000 MT of wheat for imports at prices ranging between $250-265/MT C&F, mostly from Australia for blending by south India based millers. Given the strong procurement and sufficient carryover stocks, government is unlikely to import wheat in the upcoming marketing year. However, local millers are likely to continue to import quality wheat to augment their blending requirements. Consequently, Post estimate MY 2015/16 wheat imports at 1.0 MMT. However, import prospects will improve if the domestic prices surge during the marketing year on lower domestic production realization from the current forecast.

COARSE GRAINS

Sorghum Production Revised

Based on the recent MOA's third advance estimate, MY 2013/14 sorghum production estimate has been revised marginally higher and MY 2014/15 production estimate marginally lower. The ending stocks in the PS&D have been revised to reflect the production changes.

Sorghum PSD (Area in thousand hectares, quantity in thousand metric tons, and yield in MT/hectares)

Sorghum

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

5,900

5,900

5,500

5,500

6,000

6,000

Beginning Stocks

145

145

108

398

158

238

Production

5,250

5,540

5,000

4,790

5,500

5,500

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

5,395

5,685

5,108

5,188

5,658

5,738

MY Exports

87

87

50

50

100

100

TY Exports

89

89

50

50

100

100

Feed and Residual

700

700

700

700

750

750

FSI Consumption

4,500

4,500

4,200

4,200

4,500

4,500

Total Consumption

5,200

5,200

4,900

4,900

5,250

5,250

Ending Stocks

108

398

158

238

308

388

Total Distribution

5,395

5,685

5,108

5,188

5,658

5,738

Yield

0.8898

0.9390

0.9091

0.8709

0.9167

0.9167

MY 2015/16 Barley Production Revised Lower

Based on the recent MOA's third advance estimate, MY 2015/16 barley production is forecast lower at 1.6 MMT due to untimely rains and hailstorm during March-April. The consumption and ending stocks in the PS&D have been revised to reflect the production change.

Barley PSD (Area in thousand hectares, quantity in thousand metric tons, and yield in MT/hectares)

Barley

2013/2014

2014/2015

2015/2016

Market Begin Year

Apr 2013

Apr 2014

Apr 2015

India

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

780

780

810

810

800

800

Beginning Stocks

120

120

231

231

212

212

Production

1,750

1,750

1,830

1,830

1,850

1,630

MY Imports

2

2

1

1

5

5

TY Imports

1

1

5

5

5

5

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

1,872

1,872

2,062

2,062

2,067

1,847

MY Exports

441

441

450

450

400

400

TY Exports

546

545

300

300

400

400

Feed and Residual

200

200

200

200

200

200

FSI Consumption

1,000

1,000

1,200

1,200

1,250

1,100

Total Consumption

1,200

1,200

1,400

1,400

1,450

1,300

Ending Stocks

231

231

212

212

217

147

Total Distribution

1,872

1,872

2,062

2,062

2,067

1,847

Yield

2.2436

2.2436

2.2593

2.2593

2.3125

2.0375