The Hindu Business Line : Wheat, maize supplies seen tight: IGC

India's foray into the international wheat market could not have come at a more inopportune time. Wheat crop prospects in major origins have deteriorated. Hot, dry weather conditions during July are likely to further reduce global output. Supplies for the year 2006-07 are going to tighten.

On current reckoning, world wheat output for 2006-07 is forecast at 596 million tonnes (mt), 21 mt less than the previous year's and decline for the second year in a row, London-based International Grains Council (IGC) said in its latest report.

Low output

Closing stocks, lower by an estimated 15 mt, would reach 118 mt, one of the lowest in recent years. Consumption, projected at 611 mt (622 mt), although lower than the previous year, would still be more than the year's production.

Wheat in feed rations, especially in Europe, may be partially replaced by barley and maize (corn) because of their better availability and lower prices, IGC pointed out, adding that in India tight supplies and high retail prices are curbing growth of food use.

Despite the onset of harvest, prices in the European Union and for Black Sea origins moved significantly higher, reflecting crop concerns in the EU and limited milling wheat availabilities in Russia and Ukraine, the agency commented.

Rainfall hit

Even as debate over lower wheat crop, high prices and imports goes on in India, there could be worry on the production front next year too. July is usually the month of heaviest rainfall; but precipitation across the country is less than satisfactory. According to experts, July deficits are not easily recouped.

The country should be fortunate to have that level of rainfall over the next eight weeks that would leave sufficient sub-soil moisture for Rabi planting of wheat by early November. Policymakers have to be in a state of readiness to take appropriate action to face any eventuality.

Maize (corn): World production in 2006 is likely to trail consumption demand. While world output is estimated at 692 mt, including 275 mt in the US, consumption is projected at a healthy 723 mt (up 24 mt from last year) to reflect larger use in the US and EU, according to IGC.

A considerable part of US corn is diverted for ethanol production to counter rising gasoline prices. Total stocks at the end of 2006-07 season may reach a 23-year-low of 94 mt, 31 mt down from the previous year.