A revival in the monsoon in India will boost crop prospects and enable the world’s second-biggest producer of rice, wheat and sugar to refrain from banning shipments, according to Food Minister K.V. Thomas.
“Rice production will be as good as the previous year and we have no problem in sugar as of now,” Thomas said in an interview at his office in New Delhi yesterday. “We have adequate stocks of wheat.”
India’s pledge on exports will ease concern about global food supplies after the worst U.S. drought in half a century drove corn and soybeans to records. The world needs swift, coordinated action to avoid another food crisis in the face of rising prices, the heads of three United Nations agencies said yesterday. Surging grains and oilseeds drove the biggest gain in world food costs in July since 2009, according to the UN.
“Indian exports will check any drastic gains in global prices, if not lower the rates,” said Faiyaz Hudani, a senior analyst at Mumbai-based Kotak Commodity Services Ltd. “The market knows that India will export to liquidate its excess stock and will not become very aggressive.”
High food prices in 2011 contributed to riots across northern Africa and the Middle East that toppled leaders from Tunisia to Egypt. They also triggered more than 60 riots worldwide from 2007 to 2009, according to the U.S. State Department. India extended a ban on exports of sugar, rice and wheat in 2009 after the weakest monsoon in almost four decades, before relaxing curbs in later years.
Wheat futures in Chicago have climbed 36 percent this year, touching a four-year high on July 23. Soybeans reached a record $17.89 a bushel yesterday, while corn surged to an all-time high of $8.49 on Aug. 10.
The monsoon, which accounts for more than 70 percent of India’s annual rainfall, revived last month, easing drought conditions in more than 50 percent of the country, according to the India Meteorological Department. The return of rains has narrowed the rainfall deficit to 11 percent from 29 percent at the end of June, according to the department.
Rainfall and sowing in India have picked up of late and local prices may ease, Philip Wyatt, an economist at UBS AG, said in a report on Sept. 3. “Irrigation levels have improved, which means reduced dependency on rainfall.”
Rain in September will be better than an earlier forecast, helping the growth of already-planted crops and planting of winter crops that depend on irrigation, L.S. Rathore, director general of India Meteorological Department, said Aug. 28.
The sowing of monsoon crops this year is close to normal levels and more than in the previous drought year of 2009, Wyatt said. The area under rice exceeded normal levels, while lentils and oilseed acreages are close to normal, he said.
Rice was sown in 34.7 million hectares (85.74 million acres) as of Aug. 31, compared with a normal area of 33.2 million hectares, while sugar cane was planted in 5.29 million hectares compared with an average 4.67 million hectares, according to the farm ministry.
India’s non-basmati rice shipments totaled about 6.25 million metric tons as of Aug. 22 after the ban on exports by private companies was lifted in 2011, according to the food ministry. Wheat exports were about 2.53 million tons, it said.
State reserves of wheat and rice jumped 24 percent to 76.1 million tons as of Aug. 1 from a year earlier after food-grain production climbed to a record 252.6 million tons in the year ended June 30, according to the food ministry.