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Second-biggest wheat grower seen reaping smallest crop since '08

Thursday, May 28, 2015 - 11:35
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India is probably heading for the smallest wheat harvest in seven years after rains and hail ravaged farms, forcing bread and pizza makers to boost imports.

[NEW DELHI] India is probably heading for the smallest wheat harvest in seven years after rains and hail ravaged farms, forcing bread and pizza makers to boost imports.

Production is set to drop as much as 17 per cent to 80 million metric tons from a record 95.9 million tons a year earlier, said Pravin Dongre, chairman of the India Pulses and Grains Association. That's the lowest since 2008, official data show. The government estimates output at 90.78 million tons.

Unseasonal rains have ruined crops and lowered the quality of wheat in the world's largest producer after China. That's spurred flour mills to increase imports for blending with local grain as global prices trade near the lowest level since 2010. The harvest normally starts in April and ends by June.

"We're shattered as almost all my wheat, potato and mustard crops were damaged by the untimely rains," said Sateesh Kumar, a farmer from Uttar Pradesh state. He harvested 5.2 tons from 11 acres, down from 22 tons last year.

Crops from wheat to rapeseed and vegetables were damaged on about 19 million hectares as rainfall more than double the 50-year average in February and March drenched fields, according to government data. The main wheat-producing regions had almost five times the average, data show. That's discolored the grain and raised moisture content.

"What we are hearing from our sources is that there is huge damage to the crops," Dongre said. "In some areas, there is no grain at all." Mills in southern India, which depend on supplies from growing regions in the north, say imports from Australia are cheaper and of better quality. The grain transported from central and northern India to Chennai and Coimbatore in the south sells at about 18,500 rupees (US$289) a ton, compared with Australian wheat which is available for $265 to $270 a ton in bulk at Tuticorin port, according to P. Gunasekaran, president of the Tamil Nadu Roller Flour Mills Association.

Wheat traded in Chicago, which entered a bear market in January, tumbled 24 per cent in the past year, more than the 4 per cent decline in Mumbai prices.

"We have to import as the quality of Indian wheat has been affected by the untimely rains," said M.K. Dattaraj, managing director of Krishna Flour Mills Bangalore Pvt. Ltd., which processes about 84,000 tons annually. "We are blending Australian wheat with Indian varieties to meet specific requirements from bakeries and quick-service restaurants."

Imports may surge to 1 million tons from 45,000 tons a year earlier if purchases from Russia and the Black Sea region are allowed, said Faiyaz Hudani, associate vice president at Kotak Commodity Services Ltd in Mumbai. Supplies from that area depend on the government easing phytosanitary requirements, according to Mr Dongre.

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