NEW DELHI: India’s Ministry of Finance issued a notification raising the basic custom duty on imports of wheat to 25% (ad valorem on CIF value), the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Services reported on Oct. 28.
The 2015-16 market year wheat imports are revised lower to 500,000 tonnes as the duty hike precludes additional imports. Market year 2015-16 corn exports are forecast lower to 1.5 million tonnes on uncompetitive price of Indian corn. Market year 2014-15 rice exports are estimated at a record 11.8 million tonnes.
The Ministry of Finance issued a notification increasing the basic custom duty on imports of wheat to 25%. Earlier, on Aug. 7, the government had imposed an import duty of 10% ad valorem effective till March 31, 2016, i.e., end of market year 2015-16. Market sources report that the decision to raise the import duty was due to concerns about the improved prospects for imports and relatively weak off take of government held wheat in the recent months.
Domestic prices have surged since end-September on tight supplies of quality wheat. Recent hikes in domestic prices coupled with relatively weak international wheat prices had improved prospects for imports of wheat in early October. Market sources reported renewed interest in exploring opportunities for imports of wheat after the lull since August when the 10% import duty was introduced.
Government-held wheat stocks on Oct. 1 are officially estimated at 32.5 million tonnes, marginally higher than last year’s levels, despite government efforts to liquidate the “rain affected” market year 2015-16 wheat. Sources report that the offtake of government wheat during August-September was estimated at 4.3 million tonnes. compared to 5.8 million tonnes during the same period last year.
Consequently, the government raised the import duty on wheat to curb any prospects for wheat imports. Market sources report that imports of wheat at 25% import duty is not feasible at current domestic prices.
Market year 2015-16 milled rice production is estimated at 103 million tonnes on weak 2015 monsoon during August and September. However, planted area is revised marginally lower to 43 million hectares due to the early withdrawal of 2015 monsoon, which affected late kharif (fall harvested) planting.
The Indian Ministry of Agriculture (MoA) estimates rice area planted through Oct. 16 at 37.82 million hectares, compared to 37.97 million hectares last year on lower late season planting in the drought affected southern states of Andhra Pradesh and Tamil Nadu. Market sources also expect that rabi (winter planted) rice planting will also be slightly lower than last year due to ongoing soil moisture stress and lower availability of irrigation water.
India’s government procurement of market year 2015-16 rice under the minimum support price (MSP) is significantly ahead of last year due to the timely harvest of rice unlike last year where harvest was delayed by about two weeks due to October rains.
The government procurement through Oct. 25 is estimated at 6.5 million tonnes compared to 5 million tonnes during the corresponding period of market year 2014-15. Most of the procurement is currently limited to the northern states, but will gradually spread to other parts of the country from November onwards as harvest progresses.
Domestic prices have eased in October on relatively strong early season arrival of the market year 2015-16 crop. Prices are expected to ease further in November with the arrival of the new crop across the country. However, domestic prices during the marketing year will largely depend on the domestic crop harvest and export demand.
The market year 2014-15 export estimate is raised marginally higher to a record 11.8 million tonnes based on the preliminary official statistics for October 2014 to August 2015, and September 2015 data compiled by private source. Market sources report continued strong exports of coarse non-basmati rice varieties from May 2015, mostly to African and neighboring markets.
