India. Wheat output likely to be lower by 2% to 96.1mt in 2017-18, says report

24.01.2018

The NCML report says a lower wheat crop output will be against the government’s expectations of production crossing 100mt and the dip is due to lower area planted by farmers

New Delhi: India is likely to produce 96.1 million tonnes (mt) of wheat in 2017-18, about 2% lower than the year before, while prices of major crops will continue to be flat or in their lower ranges in the months ahead, National Collateral Management Services Ltd said (NCML) on Tuesday.

A lower wheat crop will be against the government’s expectations of production crossing 100 million tonnes, NCML said, adding the dip is due to lower area planted by farmers. NCML is a private company providing post-harvest management services like warehousing for agricultural commodities.

In its crop estimates and price outlook for 2018, NCML forecasts that prices of key commodities are likely to remain flat or ‘around the lower ranges... due to higher stock to use ratios of most commodities.’

While wheat prices are likely between Rs1,630 and Rs1,705 per quintal for most of the year, prices for chana, a major winter crop, could touch lows of Rs3,300 per quintal following harvest, the report said. Chana is usually harvested starting March.

This implies while wheat prices will hover around the government announced minimum support price (MSP) of Rs1,735 per quintal, prices for chana could be significantly lower than the MSP of Rs4,400.

NCML said significantly higher planting of chana, and wheat farmers switching to the pulse crop means that “lows of around Rs3,300 (per quintal) is quite a possibility with highs in the slack season being anticipated not above Rs4,600 in 2018.”

On mustard, a winter oilseed, the company said farmers’ ‘disillusionment’ with last year’s low prices will result in a likely 4.2% dip in production in 2017-18. However, prices could dip towards Rs3,800 per quintal levels by March (during harvest) and move higher towards Rs4,300 per quintal by August.

Since India imports most of its edible oil requirements, a shortfall in domestic production does not lead to a rise in prices.

Due to significantly higher production of sugar in 2017-18, prices of the sweetener will be under pressure, NCML said, adding, “Rs2,780-Rs3,250 will be the band which will witness most of the trading in sugar during the year.”

A poor winter crop coupled with low crop prices means the spectre of farm distress will continue. Since June last year, farmers across several states have been protesting with demands of better prices and loan waivers.

Lower crop prices will also pose a challenge for the incumbent Bharatiya Janata Party in states like Madhya Pradesh, Rajasthan and Chhattisgarh, which go to polls this year.


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