India’s wheat stocks set to fall to 10-yr low

NEW DELHI: India’s wheat stocks in April next year, when the new season begins, are likely to be at their lowest levels in more than a decade after two successive droughts sapped the soil of moisture and cut output, traders and industry experts said.

Lower stocks will force India to import about 6 million tonnes of wheat in the fiscal years ending March 2017 and March 2018 to curb local prices, which have leapt 40 per cent since the current year began in April 2016, they said.

Of the 2.7 million tonnes contracted for import since April 2016, 2 million tonnes has arrived at various ports. “We expect about 3 million tonnes of imported wheat this year and almost a similar quantity next year as stocks at FCI will fall a million tonnes lower than its target,” said Tejinder Narang, a New Delhi-based market analyst, referring to the state-run Food Corporation of India.

The government-backed body buys grains at a state-set price from local farmers to build reserves to run a mammoth food welfare plan which entitles about 67 per cent of India’s 1.3 billion people to ultra-cheap wheat and rice.

According to a government target, on April 1 the FCI must have at least 7.5 million tonnes of wheat at its granaries.

“It’s psychologically unnerving to see stocks falling below the target. We haven’t seen such precariously low stocks in the recent past,” said Narang. India, the world’s second-biggest producer and consumer of wheat, lowered the import duty to 10 per cent from 25 per cent in September and this month removed the tax, boosting imports from countries such as Russia, Ukraine and Australia. — Reuters