Monthly Prices Movement

  • Wheat prices traded with more of negative sentiments in the major markets across the country. High domestic prices compared to international prices have made the buyers stay away from the market activities.

  • Rice prices also traded lower during the month in the country due to the lackluster domestic and export demand. More supplies are expected to reach the market which may further pressurize the prices.

Ground Report

  • India is expecting a record food Grain production this year in the back of well distributed rains. The government has already set a target of 270.10 million tons of yield for the year surpassing its previous record of 265.04 million tons in 2013-14.

  • India's output of Paddy is pegged 108.50 million tons, Wheat at 96.50 million tons and Pulses at 24.50 million tons for this year. Kharif sowing started with the onset of south west monsoon from June and harvesting will begin from next month.

  • USDA estimates Wheat production of India at 90 million tonnes for the year 2016-17 due to higher than earlier anticipated acreage and yields (2.98 MT/hectare).

  • Wheat import of India is likely to be around 2 million tonnes (MT) in the current fiscal due to the slashing of import duty by the government.

  • Wheat availability in the country is likely to improve due to slash in the import duty. So far during the season, 600,000-650,000 tonne of Wheat has reached the country and contracts of 3000,000-350,000 tonnes have already been booked and is waiting for the arrival.

  • International Grains Council(IGC) revised India's Rice production forecast lower at 106.50 million tonnes and exports at 8.6 million tonnes in 2016-17.

  • India's Rice production in 2016-17 is likely to rise 2.81% at 93.88 million tonnes against 91.31 million tonnes last year. Government has targeted 93 million tonnes production of Rice for current Kharif season, as per first advance estimates of agriculture department.

  • Basmati Rice exports of India jumped 10 per cent to 1.55 million tonnes during April-July from the same quarter a year ago, according to Apeda. In value terms, exports from the country fell to $1.21 billion (Rs 8,140.06 crore) from $1.32 billion (Rs 8,399.39 crore).

  • A fall was witnessed in the Basmati sowing of India this year in major producing Indian states of Punjab and Haryana, whereas other than Basmati area seen higher. According to All India Rice Exporters Association (AIRA), Basmati Rice has been sown in 1.58 million hectare in India.

  • Maize production of India is estimated at record level of 19.30 million tonnes in 2016-17. This year production of Kharif Maize is higher by 4.05 million tonnes than that the last year’s production.

  • Rice production of India is estimated to increase in 2016/17, according to United States Department of Agriculture. India’s production estimate is raised by 1.5 million tons on an increase in projected harvested area.

  • Around 2.2 million tonne (mt) of Wheat has been sold under the Open Market Sale Scheme (OMSS) by the Food Corporation of India (FCI) in current financial year so far, which has depleted the stocks. FCI had sold 7.1 mt of Wheat through the OMSS to bulk purchasers in FY16 which was at 4.2 mt in 2014-15.

  • FCI holds around 24.2 mt of Wheat stocks as of the beginning of September and should have stock of 20.5 mt on October 1 under the buffer stock norms.

Policies

  • Government of India slashed the import duty on Wheat from 25 percent to 10 percent to bring in more supplies and control prices.

  • India is likely to restrict the sale of excess Wheat stocks by Food Corporation of India (FCI) to bulk buyers through the Open Market Sale Scheme (OMSS) due to the inadequate stock levels with the FCI.

  • The Reserve Bank of India approved Rs 26,000 crore cash credit limit (CCL) for purchasing Paddy in poll-bound Punjab.

  • India's Agricultural and Processed Food Products Export Development Authority (Apeda) under the commerce ministry has imposed restriction on exporters from shipping Basmati Rice on credit.

  • US filed complaint against China to the World Trade Organization on the excessive agriculture subsides given by the country.

  • Russia's Agriculture Ministry has decided to reduce the export duty on Wheat to zero from September 23.

  • Egypt has removed the zero ergot policy on Wheat imports and has now allowed up to 0.05 percent ergot in grain shipments.

  • The government of Pakistan imposed 60 percent duty on the import of Wheat, as per minister for National Food Security and Research. Earlier this year the government had increased regulatory duty on imports of Wheat from 25 per cent to 40 per cent.

Global

  • World Wheat production estimates for 2016-17 has been revised upward by the International Grains Council (IGC) to 747 million tonnes. World Wheat ending stocks is estimated at a record 231 million tonnes and total consumption of Wheat was raised to 2.049 billion tonnes on strong growth in feed use.

  • World Corn (Maize) production is expected at a record 1.027 billion tonnes in 2016-17 and Rice production was cut by two million tonnes, but still at record 482 million, according to IGC.

  • Wheat crop of Russia is estimated at 72 million tonnes in the current season which is the country's largest harvest, according to U.S. Department of Agriculture’s (USDA).

  • Russia's Wheat exports during July to August of the current marketing year reached 4.771 million metric tonnes. The main importers during this period was Turkey, Egypt and Bangladesh.

  • Australian Export Grains Innovation Centre (AEGIC) expects that Russian Grain exports will increase by 60% from 2015 to 2030, from 21.7 million tonnes in 2015 to 32.5 million tonnes in 2030.

  • Wheat exports of France is estimated to fall to lowest in a decade and reach 11.91 million tonnes. Soft Wheat exports in 2016-17 is forecasted a drop of 43% year on year by the FranceAgriMer.

  • Australia is likely to produce the biggest Wheat crop in the last five years from the upcoming harvest of 2016/17 season. Wheat output of Australia in the year to June 2017 is expected to be in the range of between 26.7 million tonnes and 31 million tones, according to a survey.

  • Vietnam Rice exports during the first eight months of the year reached 3.3 million tonnes and in the remaining four months Vietnam hopes to export 1.6 million tonnes. The total estimated exports of 4.9 million tonnes is much lower than the export target of 6.5 million tonnes by Vietnam Food Association (VFA).

  • Global Rice supplies for 2016/17 are raised 1.8 million tons on higher beginning stocks and production and export estimate also raised 0.3 million tons with stronger shipments from India partially offset by reduced Vietnam exports, as per USDA.

  • Maize production of China is expected to fall 3.8 percent from last year and reach 216.0 million metric tons in 2016/17, according to United States Department of Agriculture (USDA). Corn acreage of the country is estimated at 36.0 million hectares which is the first area decline since 2003.

  • Brazil Maize production is expected to rebound to 84 million tonnes in 2016-17, according to Brazilian agriculture minister.

  • French exports of Barley in 2016-17 is pegged at a five-year low of 6.33 million tonnes and harvest was estimated down 20% at 10.08 million tonnes.

Outlook

  • New Rice supply is expected to start in near term in the major markets which may pressurize prices. Rice production is also likely to surge and hence sharp rally in prices are not seen in near term. However fine variety Rice prices are unlikely to drop in long term.

  • It is expected that domestic and exports demand for Rice may improve after November.

  • Prices of Basmati Rice is unlikely to decline in long term, however prices may improve with increase in domestic and export buying.

  • Wheat Market will be under pressure due to increased supply of grain from overseas market as the government has slashed the import duty, but there is least chance of much correction in prices as direction of Dollar against Indian Rupee will affect the market sentiment in future.

  • Demand of Barley will increase in this festival season and will remain high up to Diwali. This year demand of Barley will remain high due to expected higher cultivation of Rabi Pulses.

  • Fresh arrivals of Maize with higher moisture content are continuing in the markets. Maize prices are likely to pick up as there is demand from poultry and starch industry.