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India pulls down global wheat prices

With India declaring it is not going to import wheat, international prices have come down drastically, reports Jatin Gandhi.
Hindustan Times | By Jatin Gandhi, New Delhi
UPDATED ON JUN 02, 2008 01:31 AM IST

India’s massive procurement of wheat this year may not have reduced prices of wheat or atta (whole wheat flour) in the domestic market, but it has had another impact: with India declaring it is not going to import wheat, international prices have come down drastically.

"India would have imported at least 3 Million Tonnes (MT). From the moment we declared that we have procured a record amount of wheat and we won’t be importing, international prices have started coming down. Prices are now hovering around $250 a tonne," Abhijit Sen, Member, Planning Commission told HT. Sen, who is in-charge of agriculture at the commission, had headed the panel set up to study the relationship between commodity prices and futures trading.

In February, the Ministry of Agriculture had declared that wheat production in the country was going to dip by one
MT. At that time international wheat prices soared past $350 a tonne. Last week, at the Chicago Board of Trade (CBOT) July wheat prices closed at $7.59 a bushel, that’s less than $280 a tonne.

In May 2007, when India stepped into the international market to buy wheat, prices were quoted at $263 a tonne. By the time the government bought the food grain, four months later, it had to pay nearly $400 for a tonne for 8 lakh tonnes. "India should take a lesson from this. Each time, we make announcements about importing food, prices go up," said Agriculture Analyst Devinder Sharma. “China keeps its stock situation a secret," he added.

In the last week of April, as procurement soared, Agriculture Minister Sharad Pawar said India would not import wheat this year. The government had imported 18 lakh tonnes of wheat last year at approximately Rs 16 per kg. The imports were necessitated by procurement declining to 11.1 MT against a target of 15 MT. India is estimated to have produced 76.78 million tonnes of wheat during 2007-08, the Ministry of of Agriculture estimates.

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