India- Grain Update Jan 2013

An Expert's View about Crops and Support Services in India

Posted on: 26 Jan 2013

India’s MY 2012/13 rice exports are estimated to reach 8 million tons (7.5 million tons in CY 2013) driven by continued strong export demand and by relatively competitive prices.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 1/4/2013 GAIN Report Number: IN3001 India Post: New Delhi Grain Update - January 2013 Report Categories: Grain and Feed Policy and Program Announcements Trade Policy Monitoring Agriculture in the Economy Approved By: David Leishman Prepared By: Santosh Singh Report Highlights: India’s MY 2012/13 rice exports are estimated to reach 8 million tons (7.5 million tons in CY 2013) driven by continued strong export demand and by relatively competitive prices. The minimum support price (MSP) for upcoming MY 2013/14 wheat crop has been raised to Rs. 13,500 ($250) per ton, an increase of Rs. 650 ($12) per ton compared to last year. The Government of India has approved the export sale of an additional 2.5 million tons of wheat from government held stocks. General Information: RICE Table 1: India: Commodity, Rice PSD (Area in Thousand Hectares, Others in Thousand Metric Tons) 2010/2011 2011/2012 2012/2013 Rice, Milled Market Year Market Year Market Year India Begin: Oct 2010 Begin: Oct 2011 Begin: May 2012 USDA USDA O New New USDA ew fficia P Officiaost P O N fficia ost Post l l l Area Harvested 42,860 42,860 44,100 44,100 43,000 43,000 (1000 HA) Beginning Stocks 20,500 20,500 23,500 23,500 25,100 25,100 (1000 MT) Milled Production 95,980 95,980 104,32 104,32 99,000 99,000 (1000 0 0 MT) Rough Production 143,98 143,98 156,49 156,49 148,51 148,51 (1000 4 4 6 6 5 5 MT) Milling Rate (.9999) 6,666 6,666 6,666 6,666 6,666 6,666 (1000 MT) MY Imports 0 0 0 0 0 0 (1000 MT) TY Imports 0 0 0 0 0 0 (1000 MT) TY Imp. from U.S. 0 0 0 0 0 0 (1000 MT) Total Supply 116,48 116,48 127,82 127,82 124,10 124,10 (1000 0 0 0 0 0 0 MT) MY Exports 2,774 2,774 10,400 10,376 7,250 8,000 (1000 MT) TY Exports 4,637 4,637 10,000 10,250 6,500 7,500 (1000 MT) Consumption and Residual 90,206 90,206 92,320 92,344 95,250 94,600 (1000 MT) Ending Stocks 23,500 23,500 25,100 25,100 21,600 21,500 (1000 MT) Total Distribution 116,48 116,48 127,82 127,82 124,10 124,10 (1000 0 0 0 0 0 0 MT) Yield (Rough) 3. 3.3594 4. 3.5487 3. 3.4538 (MT/HA) TS=TD 0 0 0 Government Procurement Ahead Government domestic rice procurement under the minimum support price (MSP) operation is ahead of last year, reaching 16.4 million tons on January 1, 2013, compared to 15.6 million tons during the corresponding period in MY 2011/12. As a result, government rice stocks held on December 1, 2012, have rose to 30.61 million tons compared to 27.06 million tons a year ago. Table 2. India: Government Rice Procurement by State Million Tons State MY 2012/131 MY 2011/12 MY 2010/11 Andhra Pradesh 1.40 (1.46) 7.55 9.61 Punjab 8.54 (7.66) 7.73 8.63 Chhattisgarh 1.74 (1.83) 4.12 3.75 Uttar Pradesh 0.56 (1.40) 3.36 2.55 Haryana 2.58 (1.97) 2.01 1.69 Tamil Nadu - 1.60 1.54 Bihar - 1.53 0.88 Orissa - 2.85 2.47 West Bengal - 2.04 1.31 Others - 2.24 1.77 Total 16.38 (15.62) 35.03 34.20 Source: Food Corporation of India, Government of India (GOI) Not 1e Total rice procurement as of Jan 1, 2013. Figures in parentheses are previous year's procurement for the corresponding period. The increase in government procurement is largely driven by purchases by the states of Haryana and Punjab, where the irrigated crop was unaffected by the late 2012 monsoon rains. Government procurement in other states like Andhra Pradesh, Uttar Pradesh, and Chhattisgarh are below last year level dues to the delayed crop and strong export demand. Early procurement trends indicate that the GOI’s MY 2012/13 rice procurement will likely surpass last year’s record 35.03 million tons, but may still fall significantly below the GOI target of 40.1 million tons. If procurement does not increase in other rice growing states, there is some concern that the GOI may impose controls on private rice trade. The GOI will likely to present the proposed National Food Security Bill (see GAIN Report IN1213) in the upcoming session of the Parliament. If passed, the proposed bill will create a legal entitlement to subsidized food grains for 63.5 percent of India’s population, and raise annual grain allocation for the public distribution system (PDS) to 64 million tons versus the current actual off take of 56.4 million tons food grain in Indian fiscal year 2011/12 (April/March). Most of the states prefer to supply rice rather than wheat through the PDS. Despite abundant government rice stocks (currently three times the desired level), the GOI is nevertheless pressing for strong rice procurement during MY 2012/13 to ensure adequate supplies of rice through 2014 (when the next parliamentary election is scheduled) in case 2013 monsoon falls below normal. Prices Firm Despite the strength of the kharif (winter harvested) rice crop, domestic rice prices remained firm in December due to continued strong export demand. Currently, spot market prices for common grade coarse rice range from Rs. 16,200 ($300) to Rs. 25,360 ($470) per ton. Exports Raised on Continued Strong Demand MY 2012/13 rice exports are estimated to reach 8.0 million tons (7.5 million tons in CY 2013), driven by continued strong export demand and by relatively competitive prices. Based on the latest official trade statistics, MY 2011/12 (October 2011 through September 2012) rice exports reached 10.38 million tons (10.25 million tons in CY 2012); this includes 3.48 million tons basmati rice and 6.9 million tons non-basmati rice. During the month of October 2012, rice exports reached 852,500 tons. According to trade sources, rice exports in November and December 2012 remained steady with continued strong export demand and a relatively stable Indian rupee vis-à-vis the U.S. dollar. Exports of Indian non-basmati rice remain very price competitive, with the price of common rice varieties currently ranging from $355 per ton to $ 445 per ton FOB. Trade sources report that Indian parboiled non-basmati rice is very price competitive compared to rice from other origins. Indian raw rice is currently facing strong competition from Pakistan, Myanmar and Vietnam. However, export prospects for Indian raw rice are likely to improve in the next few months as supplies from other countries become tighter. Export demand for Indian Basmati rice has been steady despite the higher cost of procurement of unmilled rice (paddy) this season (Rs. 26-30,000 per ton compared Rs. 16- 20,000 per ton last year). As a result, MY2012/13 rice exports are expected to reach 8 million tons (7.5 million tons in CY 2013), assuming continued export price parity and no changes in the GOI export policy for rice. While many trade sources optimistically estimate that Indian rice exports could reach as much as 10.0 million tons in MY 2012/13, export prospects will likely be dampened by the higher cost of Indian rice due to the significant increase in the MSP and by higher market prices for unmilled Basmati rice. The GOI is likely to continue with the current rice export policy, at least through the first half of the marketing year, but may review its stance on non-basmati rice exports if government procurement falls significantly behind or if domestic prices increase significantly (i.e. due to a poor 2013 monsoon). WHEAT Government Raises Support Price On December 26, 2012, the Cabinet Committee on Economic Affairs (CCEA) approved the minimum support price (MSP) for upcoming MY 2013/14 wheat crop at Rs. 13,500 ($250) per ton, an increase of Rs. 650 ($12) per ton compared to last year. The MSP decision for wheat came nearly two months later than last year, due to inter-ministerial differences (see GAIN Report IN2144). However, the increase in the wheat MSP is unlikely to trigger any significant shifts away from competing rabi (winter planted) pulse and oilseed crops, as wheat planting in the major wheat growing states is already nearing completion. Earlier, the Commission for Agriculture Cost and Prices (CACP) had recommended a freeze on the wheat MSP (at last year’s level of Rs. 12,850 per ton). However, the Ministry of Agriculture opposed this recommendation at the CCEA meeting of November 1, 2012. While the CACP suggested offering an additional bonus of Rs. 400 per ton in MY 2013/14, the Ministry of Agriculture pushed for increasing the wheat MSP by Rs. 1000 ($18.5) per ton in MY 2013/14. 2013 Wheat Planting Marginally Behind The Ministry of Agriculture’s 2012/13 rabi planting progress report shows that wheat crop planting through December 28, 2012 reached 27.3 million hectares, compared to 27.7 million at the same time last year. Lower planting has been reported in most of the states (Punjab, Haryana, Rajasthan, Gujarat and Maharashtra), except for Uttar Pradesh and Madhya Pradesh where wheat planting is ahead of last year. Wheat planting in the major growing states is almost over, except for some additional late planting in the states of Uttar Pradesh and Bihar through mid-January following the harvest of sugarcane crop. The total wheat planted area in MY 2013/14 is likely to be marginally below last year’s record area (29.7 million hectare). Wheat planting conditions have been generally favorable with adequate soil moisture conditions. In recent weeks, most wheat growing regions have seen a decline in temperatures, providing favorable growing conditions. However, MY 2013/14 wheat production will largely depend on winter rains (December/January) and temperatures during the critical grain filling and ripening stages in February and March. Government Wheat Export Quota Raised On December 26, 2012, the CCEA approved the export of an additional 2.5 million tons of wheat from government stocks. In July 2012, GOI had announced an export quota of 2.0 million tons (see IN2095) which was nearly exhausted by December 2012. The new export quota will be tendered through the three assigned government parastatatals for shipment through June 30, 2013, subject to a floor price of $ 300 per ton FOB. The GOI press release noted that the export of 2.5 million tons wheat from government stocks would help ease the problem of inadequate storage infrastructure, and would also help ensure more efficient management of food grain stocks. Government Wheat Exports Steady Government parastatals assigned to export wheat from government-held stocks have floated tenders for about 2.7 million tons, of which about 2.05 million tons has been allocated to various private exporters. The December government wheat tenders have been allocated at prices ranging from $321.10 to $324.150 per ton FOB; slightly below the November high of $328.05 per ton (see Table 3). Market sources report that about 1.3 to 1.4 million tons of government wheat has been shipped through the December 2012, and will reach 2.0 million tons by the end January 2013. With the additional 2.5 million export quota, government parastatals are likely to let more tenders for shipment during February and March to create space for the upcoming 2013/14 wheat crop. Assuming continued firm international wheat prices, the government is likely to ship out an additional 1.2 million tons during February and March 2013. Provisional official trade statistics indicate that wheat exports for April to October 2012 reached 3.1 million tons. The major export destinations include Bangladesh, South Korea, U.A.E., Indonesia, Tanzania, Thailand, Yemen, Oman, Djibouti and Ethiopia. Market sources report that April to October 2012 shipments include 2.5 million tons of private wheat and about 0.6 million tons of government wheat. With the current tight market supplies of wheat, private wheat exports are likely to come down significantly in the coming months. As a result, MY 2012/13 wheat exports continues to be estimated at 6.5 million tons. Table 3: India: Government Wheat Tenders Agency Quantity Tender Close Shipment Period Price Port of Loading (Tons) (US$ per ton FOB) STC 100,000 Aug 3, 2012 Aug/Sept 302.50 Mundra PEC 90,000 Aug 3, 2012 Aug/Sept 296.70 Kandla PEC 60,000 Aug 16, 2012 September 308.00 Krishnapatnam MMTC 35,000 Aug21, 2012 September 301.10 Pipavav STC 40,000 Aug 24, 2012 Sept/Oct 311.10 Chennai PEC 125,000 Sept 10, Oct-Nov 10 313.50 Kandla 2012 PEC 70,000 Sept 13, October 316.01 Krishnapatnam 2012 PEC 30,000 Sept 27, Oct 10- Nov 5 307.50 Karaikal 2012 STC 40,000 Oct 9, 2012 Oct 20-Nov 20 305.00 Chennai MMTC 50,000 Oct 10, 2012 November 308.36 Kakinada STC 150,000 Oct 19, 2012 Nov-Dec 10 311.75 Mundra PEC 100,000 Oct 19, 2012 Oct 25-Nov 25 310.00 Krishnapatnam MMTC 35,000 Oct 25, 2012 Nov 10-Dec 10 310.80 Pipavav PEC 125,000 Oct 30, 2012 Nov 10-Dec 15 314.12 Kandla MMTC 100,000 Nov 8, 2012 Nov 25-Dec 31 318.67 Kakinada STC 30,000 Nov 16, 2012 Nov 20-Dec 15 315.20 New Mangalore PEC 55,000 Nov 19, 2012 Nov 26-Dec 25 319.50 Karaikal MMTC 30,000 Nov 20, 2012 Dec, 2012 317.00 Mormugoa STC 40,000 Nov 20, 2012 Dec, 2012 317.21 Chennai STC 150,000 Nov 26, 2012 Dec 10-Jan 15, 322.22 Mundra 2013 PEC 100,000 Nov 26, 2012 Dec 10-Jan 10, 324.00 Krishnapatnam 2013 MMTC 50,000 Nov 27, 2012 Dec 10-31, 2012 322.13 Pipavav PEC 125,000 Nov 29, 2012 Dec 10-Jan 15, 328.05 Kandla 2013 MMTC 100,000 Dec 18, 2012 January 2013 323.11 Kakinada PEC 90,0001 Dec 20, 2012 Jan10-Feb 10, 2013 324.15 Kandla PEC 35,000 Dec 21, 2012 January 2013 321.10 Vizag STC 40,000 Dec 21, 2012 January 2013 321.89 Chennai MMTC 50,000 Dec 21, 2012 Jan, 2013 322.48 Pipavav PEC 35,000 Jan 3, 20122 Jan 10-Feb 10, 2013 NA Karaikal PEC 100,000 Jan 7, 2013 Jan 10-Feb 15, 2013 NA Krishnapatnam STC 50,000 Jan 10, 2013 Jan 21-Mar 5, 2013 NA Mundra STC 100,000 Jan 10, 2013 Jan 21-Mar 5, 2013 NA Mundra MMTC 150,000 Jan 11, 2013 Feb 1-Mar 5, 2013 NA Kakinada MMTC 50,000 Jan 16, 2013 Feb 2013 NA Pipavav PEC 125,000 Jan 17, 2013 Feb 1-Mar 10, 2013 NA Kandla STC 40,000 Jan 23, 2013 Feb 2013 NA Chennai TOTAL 2,695,000 Note: STC- State Trading Corporation; PEC - Project Export Corporation; and MMTC - Minerals and Metal Trading Corporation 1 - 125,000 metric tons tender, but actual allocation 90,000 metric tons only. 2 - Addendum 1, and Addendum 2
Posted: 26 January 2013

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