India Lowers Expected Wheat Harvest

July 25, 2002

The government of India has revised the country's 2002 wheat production forecast down to 71.47 million tons from its previous projection of 73.53 million tons. Most of the decline was in Punjab and Haryana, reflected in the lower procurement of wheat from these states.

Government wheat procurement this year totaled 19 million tons, 1.6 million tons less than last year's record procurement, but still the second largest. Wheat offtake from government stocks during April and May was around 2 million tons, which included 750,000 tons for exports. Offtake during the corresponding period of last year included 800,000 tons for exports.

Lower procurement combined with larger offtake should help contain stock build up, which on June 1 was 41.3 million tons compared with 37.6 million tons a year ago but below the earlier forecast level of 45 million tons.

Unlike previous years, domestic wheat prices have started firming up which should result in increased offtake from government stocks by flour millers and the public distribution system. During 2001-02 (April-March) total wheat offtake from government stocks was 15.2 million tons, which included 2.74 million tons for exports, compared with 7.73 million tons in 2000-01, including 1.7 million tons of exports.

Despite a good start, the critical southwest monsoon has weakened considerably over the past two to three weeks in most parts of India, which could adversely affect this year's fall rice harvest prospects. Planting has been delayed in most states and the planted crop is facing severe moisture stress.

Even states like Punjab and Haryana, where the crop is almost entirely irrigated, are facing the brunt of poor rains and above normal temperatures. Even if the monsoon activity gains momentum in the coming weeks, production is unlikely to reach the forecast level of 89 million tons.