Advance wheat yield pegged at a record 78 mt

“The estimate of wheat output in 2007-08 is likely to be revised upwards to around 78 mt,” said chairman and managing director of the Food Corporation of India (FCI) Alok Sinha, adding that the fourth official crop production estimates would be released soon.

Sinha is also happy with the Government’s build-up of buffer stocks in the current marketing season. The wheat stock has swelled to 22.2 mt and that of rice to 25.9 mt. The wheat stock is well above the maximum buffer norm for the year (on July 1) which is 17.1 mt. The maximum buffer norm for rice at 26.9 mt will also be met as the Government’s purchase will continue till the end of September, he said.

Wheat production has increased from 69.35 mt in 2005-06 to 75.81 mt in 2006-07, keeping pace with the growing demand. For the year 2007-08, the Government had fixed the wheat production target at 75.50 mt, which was surpassed as the third advance estimate projected 76.78 mt output in late April this year. The official estimate then also projected a record foodgrain production in 2007-08 at 227.32 mt, which included 95.68 mt of rice.

The South-West Monsoon this year arrived earlier than its schedule in most parts of the country. The countrywide average cumulative rainfall in the season till June 11 has been 30 per cent more than the normal, with excess rainfall in 23 meteorological subdivisions and normal in seven. Out of the total 36 meteorological subdivisions, only five received deficient rain and one scanty rain. With the arrival of good rains, sowing operations have already begun.

But despite good farm production, worries of inflation are there. The inflationary trend in prices measured on the basis of the point-to-point movement in the wholesale price index peaked to 8.75% in the week ended on May 31 — a seven-year high!

Experts feel the inflation would soon touch double-digit mark as the Government recently hiked the prices of petroleum products.

The International Grain Council (IGC) has said the global food prices are expected to rise further despite good production. The recent dip in wheat prices between $10 and $80 a tonne and the weakening of rice export quotations are not enough indications to bring cheer. This appears temporary and is driven primarily by the reports of a good harvest and favourable outlook for the next crop.

Maize prices remaining volatile in the background of the continued strengthening in the global energy market and further increase in ocean freight rates, however, raise concerns about the futures market behaviour.

The IGC’s projection of the increase in global wheat production to 650 mt in 2008-09, up by 46 mt over the previous year and increase in carryover stocks to 131 mt may bring in some confidence to meet the projected demand of 632 mt.

But this expectation may be short-lived. IGC says the increased global grain supplies will almost entirely be absorbed by the rising use, especially to make ethanol. More wheat and barley will be used for feed in place of maize and sorghum, which would be used more for producing bio-fuel.