USDA lowers India wheat production forecast following yield loss due to extreme temperatures

INDIA— United States Department of Agriculture’s Foreign Agricultural Service Post in New Delhi is lowering its India market year (MY) 2022/2023 (April-March) wheat production forecast to 99 million metric tons (MMT) compared to the pre-harvest forecast of 110 MMT.

This follows the reported yield loss due to extreme temperatures which began the second week of March during the critical milking/seed setting stage throughout the major wheat growing areas.

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As a result, government procurement is down in the major wheat producing states as open market prices remain well above the MSP offer price of Indian rupees US$258.25/metric ton (MT).

MY 22/23 wheat procurement through May 19, 2022, is estimated at 18.2 MMT, making it less than half of the last year’s procurement at the same time.

Despite the wheat export ban imposed with the intent of bolstering MSP government wheat procurement, there has not been any significant improvement as market prices are still above the MSP offer price in the major production states.

MY 2022/2023 wheat exports forecast is lowered to 6 MMT. The Indian government will permit wheat exports to continue to neighboring countries including Bangladesh, Nepal, Sri Lanka, and other food security vulnerable countries.

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Domestic prices are set to remain higher this season compared to last year’s because of tighter supplies. Besides the lower harvest, market sources report that farmers and local traders are holding back larger than normal stock levels in anticipation of price increases in the months ahead.

At the current procurement pace, market sources indicate that MY 22/23 government procurement will total just 19-20 MMT when compared to the last year’s record procurement volume of 43.3 MMT

The smaller-than-expected MY 22/23 wheat harvest, rising food inflation, and low government wheat procurement under its MSP program is affecting the government’s ability to supply wheat under its domestic food assistance/security programs.

Thus, the Indian government has reduced its Wheat Allocation in Food Security Programs replacing it with additional rice volume, from May 2022 onwards.

It is revising the monthly volume of rice released from 2.16 MMT/month to 3.27 MMT/month. Simultaneously, wheat allocation is reduced from 1.82 MMT/month to 0.71 MMT/month for the period running from May to September 2022. 

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The MY 2021/2022 rice and corn production estimates are raised

Post’s MY 21/22 (October-September) rice production estimate is raised to 129.5 MMT based on the estimated higher fall harvested production, favorable market prices and Increased government procurement

Additionally, the increased use of rice in government food security programs has raised the MY 21/22 consumption estimate to 109.5 MMT and lowered estimated ending stocks to 36 MMT.

Indian rice exports are forecast to continue strong, with preliminary official trade statistics indicating that rice exports during the first quarter of CY 2022 are at 5.9 MMT compared to 6.1 MMT seen last year.

Post’s MY 21/22 corn production estimate is raised higher to 33 MMT based on the projected higher corn production and consumption is raised higher to 29.8 MMT on expected higher consumption of corn for feed use.

Despite record harvest, strong domestic and export demand have resulted in a strong and steady increase in rice prices since the beginning of MY 21/22.

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