NEW DELHI (Commodity Online): Climate change and late harvesting of paddy has given way to a shrink in the production of wheat in the country, which in turn may bring about a substantial increase in the wheat prices this year.
The area under wheat has fallen by 3% to 207.11 lakh hectares (ha) against 212.90 lakh ha in the last year. In Uttar Pradesh, lower wheat acreage has been registered because of the delayed harvesting of sugar cane and because of an ongoing tussle between the farmers and Government over the State Advised Price (SAP). Punjab, Haryana and Uttar Pradesh are the major wheat procurement states for the centre.
The agriculture ministry has attributed the fall in wheat acreage to late harvesting of contingency crops in drought-hit regions, such as eastern UP, in the summer season. Wheat growing states of Haryana, Chattisgarh, Gujarat, Himachal Pradesh, Maharashtra, Jharkhand and Karnataka have also been affected by the drought.
The harvesting of wheat usually begins in November and its marketing around March. The current period is considered a lean season for the crop when stocks with the Centre are relatively low and prices in the domestic market are firm. In the past, low acreage in UP had led private firms to buy a good quantity of wheat from the market at higher prices.
Govt had to sell wheat at a subsidized price to the states and wholesale buyers in last year because of high prices, still the prices were too high that buyers found it cheaper to import from Australia. Many states also failed to pick up the supply.
Wheat prices around the world are also supposed to go higher as crop damage in Australia and logistical concerns in the U.S. tighten supplies.
World wheat closing inventories are forecast to fall to 181 million tonnes, 10 percent below the 2010 level. The tightening of supply has led to sharp price increases from the onset of the current season in July, with prices surging the most during August, when the Russian Federation decided to ban exports. Prices have remained firm since then.
In recent weeks, wheat prices have also been influenced by concerns about lower plantings in the Russian Federation and Ukraine, unfavorable crop conditions in the US and, more generally, the expectation of an insufficient increase in overall plantings, with farmers in many major producing countries likely to increase plantings of other crops. This prospect, combined with tightening maize supplies and a weak US dollar, continues to underpin wheat futures.
Global production of wheat will trail demand by 20.3 million tons in the 2010-2011 season, reducing stockpiles to 180.9 million tons at the end of the season, from 200.9 million the previous season, according to the FAO.
