NEW DELHI, 4 April 2020: India is heading for a fourth consecutive record wheat harvest, with marketing year (MY) 2020/21 (April/March) production forecast at 105 million metric tons (MMT). MY 2020/21 rice production is forecast at a near record 117 MMT with average yields.
Back-to-back record harvests and government procurements have inflated MY 2019/20 wheat and rice stocks to more than three times desired levels.
The Government of India (GOI) is likely to release additional wheat and rice at subsidized prices in CY 2020 and 2021 to reduce stocks to manageable levels. Indian wheat remains uncompetitive in the international market, but exports in MY 2020/21 are forecast higher at 1 MMT on expected higher sales to neighboring countries.
Rice exports in MY 2020/21 are forecast to recover to 12 MMT on higher exportable supplies. MY 2020/21 coarse grain consumption is forecast at 45.8 MMT stagnant over last year on weak demand from the poultry sector, which has been hit by fake news that poultry products can transmit Covid-19.
Production outlook 2020-21
Excellent late 2019 monsoon rains and improved availability of irrigation water provided ideal planting conditions prompting farmers to increase the area planted to wheat. The Ministry of Agriculture and Farmers Welfare’s (MoAFW) second advance estimate released on February 18, 2020, estimated the area planted to wheat at 31.1 MHa, nearly six percent higher than last year, largely in the less irrigation-intensive states of Madhya Pradesh, Uttar Pradesh, Rajasthan, and Gujarat, the report underlined.
Adding further, the report said, The GOI’s steady increase in the minimum support price (MSP) for wheat, coupled with expanding MSP procurement operations in most states, have encouraged farmers to continue to planting wheat in the rabi (winter planted) season.
Exports
Despite the fourth consecutive upcoming record wheat harvest and large government-held wheat stocks, Indian wheat is not export-competitive due to high MSP-driven domestic prices compared to international prices. However, if domestic prices weaken after the arrival of the new crop, some Indian wheat may find a market in neighboring countries.
Assuming relatively weak domestic prices, no significant change in the value of the Indian rupee vis-a-vis other currencies or the GOI’s wheat export policy, MY 2020/21 wheat exports are forecast higher at 1.0 MMT, reflecting expected higher sales to neighboring Nepal, Bangladesh, and Sri Lanka, and higher wheat flour exports to traditional African and Middle Eastern markets.
Click here to see the full report
