USDA: India poised to return to being a net wheat importer
Source: Open grain storage in India. Photo Credit: Flickr (S. Mittal/CIMMYT)

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India is poised to return to being a net wheat importer, US officials said, as their slashed their forecast for this year's harvest, citing "significant crop damage" from "unprecedented" rains.

The US Department of Agriculture's New Delhi bureau slashed by 5.0m tonnes to 87.0m tonnes its estimate for wheat output in India - the second-ranked wheat producing country, after China.

The downgrade – which leaves the country facing a drop of 8.85m tonnes in production, the biggest year-on-year decline in output since at least the 1950s – reflects rains "an unprecedented heavy and intermittent spell of rain" which lasted from late February to the third week of April in central and north western areas.

"Cumulative rainfall during March through the third week of April was nearly double the normal in these areas," the bureau said.

Net importer again

The weaker production hopes have left India looking at imports of 1.0m tonnes in 2015-16, which started last month, the highest figure in eight years, and likely to comprise mostly "quality wheat for blending by millers based in the southern states".

Significantly, buy-ins will exceed shipments for the first time in five seasons, ending a spell when India has achieved net exports as high as 6.8m tonnes in 2012-13.

The revisions also represent a rare piece of bullish news for wheat markets dominated of late by ideas of improving crop prospects in North America, Europe and the former Soviet Union - although a wheat tour of the key US state of Kansas has exposed lower-than-expected yield prospects, fuelling a rise in Chicago futures on Wednesday.

"Strong wind and hailstorms"

The bureau said that the Indian crop had suffered "significant crop lodging and damage to the crop across major wheat growing belt", thanks not just to rain, but "strong wind and hailstorms" which accompanied the precipitation.

Indeed, Indian officials estimate that 6.3m hectares, an area twice the size of Belgium, had been "adversely affected by untimely rains and hailstorms, resulting in head loss due to lodging", the bureau said.

"Prolonged rains and cloudy conditions have also adversely affected pollination, seed setting and overall grain development for the standing crop."

On quality terms, a tour of northern India suggested lower kernel counts, smaller gain size and "more shrunken kernels" than usual.

"Frequent rains and high humidity during crop maturity stage also resulted in higher incidence of rust," a fungal disease, "in some pockets of north India which will also contribute to lower yields".

Range of forecasts

Indeed, the bureau acknowledged that some estimates for the harvest were as low as 80m tonnes, a figure which would be the lowest in seven years.

However, some other commentators have retained stronger forecasts, with the International Grain Council on April 23 cutting its estimate by 1.9m tonnes to 94.0m tonnes, down a modest 2% year on year.

"In India, heavy rains, strong winds and hailstorms during February and March are reported to have adversely affected the crop in northern states, notably in Uttar Pradesh and Haryana", the IGC said.

Photo credit:Open grain storage in India. Photo Credit: Flickr (S. Mittal/CIMMYT)