The Hindu Business Line : World wheat supplies tightening

International wheat market is firming up because of a combination of factors including weather uncertainties, tightening supplies, renewed speculative interest and emergence of import demand from India and Iraq.

As sellers and buyers weigh market conditions, new business is slow.

Global wheat output is expected to trail consumption for the second year in a row. This is leading to a drawdown of stocks and tightening of supplies.

For 2006, production is forecast at 601 million tonnes, down 16 mt from last year, according to the latest report from London-based International Grains Council (IGC).

Consumption in 2006-07 is estimated at 612 mt (down from 624 mt in 2005-06) and closing stock is projected at 118 mt, down from 130 mt of last year.

Consumption in India, although on the rise, is likely to be affected by higher domestic prices, while tighter supplies are expected to affect feed use in the US, IGC said.

In response to a 3 mt tender, India received only two valid bids totalling 1.7 mt, IGC report pointed out.

Trading houses in the world grain market are anxiously awaiting developments in India. The uncertainty relating to the country's intended purchases seems to have made suppliers wary.

"Lobby pressure seems to be at work in full throttle" is the refrain of some reputed trading houses. Many have begun to question the rationale of India entering the market at one go for a massive 3 mt purchase without actually assessing its infrastructure and logistics capabilities.