After a two-year decline in production, India is headed for a bumper wheat harvest in FY18. According to the agriculture ministry estimates, the upcoming harvest is pegged at 96.64 million tonne, an all-time high for the world’s second-largest wheat grower and consumer. The country’s previous two wheat crops were impacted by inclement weather, which reduced the output to about 87 million tonne in each year. The positive development comes on the back of imports of more than five million tonne of wheat, the biggest annual purchase in a decade, as the government resorted to imports to meet the supply shortfall owing to two years of low production. The government, which had lowered the import tax on the grain from 25% to 10% in September 2016 and scrapped it fully in December, is likely to revert to the 25% tax to protect local farmers from a crash in local prices. In fact, global wheat prices, represented through the benchmark Chicago soft winter wheat futures, had fallen to a decade low of $3.83½ a bushel last August, following a bumper global harvest estimate. Though prices have since then recovered to $4.30 ½ a bushel, there are fears that following Russia’s and India’s bumper harvest, it could head south again.
Global wheat prices could head south as India prepares for a bumper harvest in FY18
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