India is the second largest producer of wheat in the world after China, contributing to about 13.02 per cent of the world’s production. According to the 4th advance estimate, wheat production for 2012-13 is estimated at 92.46 million tonnes (mt).
Over the last three years, production has increased due to good yields, supported by good monsoon and increase in the minimum support price. Over 94.54 per cent of the total production of the country comes from six States. The top wheat producing States of the country are Uttar Pradesh (31.93 per cent), Punjab (18.21 per cent), Haryana (13.37 per cent), Madhya Pradesh (12.16 per cent), Rajasthan (9.82 per cent) and Bihar (4.98 per cent).
Domestic consumption is estimated at 85-90 mt. India is the third major wheat consumer globally after China and European Union.World wheat production is projected at a record 708.9 mt, up 3.5 mt. Higher production in Canada, the European Union (EU), and the FSU-12 (former Soviet Union states) more than offset a drop in Iran and Paraguay. Black Sea production is expected to rebound to 108 mt due to favourable weather, compared with 77.2 mt in 2012-13. Consumption is expected to reach a record 707 mt, up 4 per cent from 2012-13 and the global feed use is expected to rise three per cent to 141 mt.
The wheat spot market price variation study indicates that the price volatility remains steady for most of the year and a spurt is witnessed in the period between June and August. Reports of Black Sea exporters re-entering the market at competitive prices is likely to keep the global price volatility under check. There are reports that Black Sea production is likely to rebound by 40 per cent to 108 mt on improved weather and higher yields. Russian production is expected to increase by 16.3 mt from 2012-13 to 54 mt and Black Sea exports are expected to reach 37.1 mt and represent 24 per cent of world market, compared with 19 per cent in 2012-13. In the domestic market, the spurt in the volatility was noticed during July-August 2013 (from an average of around 20 per cent to over 40 per cent) and since then prices have been consolidating in a tight range.
The major development which has supported the global market is the demand from China, which is expected to import 9.5 mt, compared with the 5-year average of 1.74 mt with its production remaining unchanged at 121 mt. Spot prices in Delhi sharply declined from March onwards due to higher wheat production. The Indian market is marginally stable at the higher level amidst expectation that 5.5 mt of wheat will be exported in the current marketing year.
Wheat being a Rabi crop, sown during October to December, is highly dependent on good monsoon. This year, good rainfall in major producing regions has provided the required soil moisture during the sowing period. The upcoming harvest season is likely to see production of around 90-95 mt. The Indian market is currently pegged around ?1,650 a quintal, which is likely to hold on for the coming season without much fluctuation. I expect the 2014 prices to be range-bound with an upper cap of ?1,780 and lower firm support at ?1,420 a quintal.
Source:- thehindubusinessline.com
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