India’s wheat output in 2019 likely to fall on deficit rainfall

Wheat production in India may fall in 2019 from record output this year as scanty rains and high temperatures have curtailed water supplies in canals in key growing regions of Uttar Pradesh, Madhya Pradesh and the western state of Gujarat, threatening yields of the winter-sown crop.

Madhya Pradesh and the northern state of Uttar Pradesh are India’s top two wheat-producing states, accounting for more than 45 per cent of the country’s total output. These two states received nearly a tenth less rainfall than normal during the June-September monsoon season. Besides water scarcity, higher temperature are also hindering growth of the crop.

Only one wheat crop is grown in India each year, with planting starting in late October and harvesting in March. Farmers have planted wheat on 15.3 million hectares as of Nov. 30, down from 15.7 million hectares last year.

A drop in output could lift local wheat prices and force the world’s second-biggest producer to reduce import taxes on the grain to augment supply. Higher imports from India could support global Wheat prices, while a local price increase could calm angry farmers in northern India.

Local wheat prices have risen more than 15 per cent in the last five months on the low rainfall levels and as depreciation in the rupee made imports more expensive. The price rise could prompt the government to release stocks from its warehouses.

India harvested a record 99.70 million tonnes of wheat in the crop year to June 2018. Government wheat stocks stood at 33.14 million tonnes as of Nov. 1, up 39 per cent from a year ago. The government could allow another 10 per cent rise in prices to please farmers, but if prices rise above 2,200 rupees a tonne then it may cut import taxes to protect urban consumers.

Indian flour millers imported 1.65 million tonnes of wheat in the 2017/18 fiscal year, down from 5.7 million tonnes the previous year, mainly from Australia, Russia and Ukraine.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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