India's wheat harvest in 2023 is at least 10% lower than the government's estimate, a leading trade body has told Reuters, amid a sharp rise in local prices during the past two months.
Lower wheat production for a second straight year could complicate New Delhi's efforts to keep a lid on prices of the staple and overall food inflation, a major concern amid forecasts of an El Nino weather pattern.
'Poor Availability'
"Availability of wheat is very poor in the market. It suggests production was around 101 million to 103 million tonnes," said Pramod Kumar S, president of the Roller Flour Millers' Federation.
The industry estimate of this year's wheat output has not been previously reported.
According to the government, wheat output rose to a record 112.74 million metric tonnes in 2023, up from 107.7 million metric tonnes a year earlier. India consumes around 108 million metric tonnes of wheat annually.
Farmers start harvesting wheat from March, selling most of their crop to state agencies and private traders by June.
Read More: Weather Threatens Indian Winter Crops Just Before Harvesting
Optimistic Expectations
Supplies from farmers have already dropped, suggesting the agriculture ministry's production estimate is more optimistic than the reality, Kumar said.
Wheat prices in New Delhi have jumped 10% in the past two months to 24,900 rupees ($303) a metric tonne, prompting the government to impose a limit on the amount of wheat stocks traders can hold for the first time in 15 years.
A New-Delhi based trader with a global trade house also said the farm ministry had overestimated this year's wheat output, while a Mumbai-based trader said the government had failed to take into account heatwaves in February and March and untimely heavy rainfall in April.
"The government was forced to U-turn on exports last year because of the wrong estimate. This year, it could be forced to allow duty-free imports in the December quarter," the Mumbai trader said.
The Ministry of Agriculture & Farmers Welfare did not immediately respond to a request for comment.
India, the world's second biggest wheat consumer, banned exports in May 2022 after a sudden rise in temperature clipped output at a time when shipments were picking up to meet the global shortfall triggered by Russia's invasion of Ukraine.
The government has bought 26.2 million metric tonnes of new-season wheat from farmers against initial projections of 34.15 million tonnes, indicating lower output.
Read More: India Inflation Seen Easing In March On Softening Food Price Rises
News by Reuters, additional reporting by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.
