Rains, Hailstorms Set to Cut India’s Wheat Harvest From Record

Wheat output in India, the world’s second-biggest grower, will miss a forecast for a near-record harvest this year after unseasonal rain and hailstorms damaged crop.

Production may fall as much as 5 percent from 95.8 million tons estimated by the government in February, Agriculture Minister Radha Mohan Singh told reporters in New Delhi on Tuesday. The crop loss estimate is preliminary and farm ministry officials will soon tour growing regions to make a final assessment, he said. The harvest was a record 95.9 million tons in 2013-14, ministry data show.

Damage to crops from wheat to rapeseed and vegetables because of unseasonal rains this year is threatening to stoke food inflation in Asia’s third-largest economy. The government may use wheat stockpiled from previous harvests to curb price increases, according to Shashanka Bhide, director of Madras Institute of Development Studies.

“Availability of stocks will help the government in managing the supply-demand balance this year,” Bhide said by phone from Chennai on Tuesday. “Globally, the supply situation is comfortable, so we don’t see any price impact.”

India’s state reserves of wheat totaled 19.5 million tons on March 1, more than double the emergency requirement, government data show. The South Asian nation needs 93.85 million tons of wheat for domestic consumption including about 12 million tons for seed and animal feed, the Food Ministry estimates.

Global Output

World wheat output reached a record 724.76 million tons in 2014-2015, U.S. Department of Agriculture data show. That may help expand global grain stockpiles to 432 million tons, the highest since the mid 1980s, the International Grains Council estimates.

Wheat output in Uttar Pradesh, the largest grain growing state, may fall this year to 31.3 million tons from 33.4 million tons estimated earlier, Amit Mohan Prasad, principal secretary for agriculture, said.

Winter crops in about 11.3 million hectares (27.9 million acres) were damaged in above-normal rains during February and March, Singh said. The damage poses risks to food inflation in the next three months and consumer price inflation may rise to 6 percent in the second quarter of 2015, 80 basis points more than the current estimate, Sonal Varma and Aman Mohunta, Mumbai-based analysts at Nomura Holdings Inc., wrote in a report on April 6.

Inflation, which has averaged 5.3 percent this year, is set to moderate to 4 percent by August before firming up to 5.8 percent by March 2016, Reserve Bank of India Governor Raghuram Rajan said on Tuesday. He left interest rates unchanged at a scheduled meeting today.

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