India’s wheat harvest prospects uncertain as heatwave concerns emerge

As India’s wheat cultivation nears harvest, concerns over crop conditions have emerged due to heatwave warning over the key wheat growing states, which could dampen export hopes in the coming months.

For the marketing year 2022-23 (April-March), India’s wheat output is seen at a record 112.2 million mt, up 4.2% on the year, according to data released by the agriculture ministry Feb. 14.
The India Meteorological Department has forecast rising day temperatures across northern India, particularly in major wheat producers Uttar Pradesh, Punjab, and Haryana, for the next few weeks.

Wheat, the second-largest food grain sown in India after rice, is planted during October-November and harvested over February-March.

Wheat crops see optimum yield under sunny days and cold nights and to date in the current marketing year, the weather has been favorable for the wheat crop.

Market participants are, however, skeptical of India’s wheat harvest estimate. According to an S&P Global Commodity Insights survey of 11 analysts and traders, India’s wheat harvest is expected at 107 million-108 million mt in MY 2022-23.

“The output is likely to increase on the year but not this much due to heatwave concerns over the crop like last year,” said a trader based in Delhi. “The output may be smaller than the estimates.”

Market participants are also pointing out that the acreage under the crop has been largely steady on the year.

Wheat acreage for MY 2022-23 was at 34.1 million hectares, against 34 million hectares in the previous year, the country’s agriculture ministry data showed.

“With acreage largely the same as last season, wheat crop can be damaged under intense heatwave,” an official with a multinational trading firm said.

In MY 2021-22, too, severe heatwave had shrunk India’s wheat harvest due to poor yields. The drop in yields had forced the government to reduce its wheat output estimates to 107.7 million mt, against the previously forecast bumper output of 111.3 million mt.

Some in the trade circles are, however, hopeful that the impact could be limited as the IMD has also predicted showers in isolated pockets in northern India over the next two weeks.

The concern over the harvest has also cast a doubt over future exports of wheat from India.

Due to a decline in output in MY 2021-22, India imposed a ban on wheat exports on May 13, 2022 amid rise in wheat prices and tight supply. The rising prices of wheat, a staple food in India, also forced the government to release stocks from buffer reserves.

The country had emerged as a key supplier of wheat amid global shortages in the wake of Russia’s invasion of Ukraine.

Prior to the ban, the country planned to export a record 10 million mt wheat in from the harvested crop in MY 2021-22, up from 7.85 million mt in the previous year.

However, exports dipped after the restrictions were imposed.

Since the government released 5 million stocks from its inventories over January-February, domestic wheat prices have declined.

Wheat prices have declined to around Rupees 23,500/mt ($284.5/mt) March 1, down from record highs of Rupees 31,500/mt seen around a month ago, traders said.

Despite the concerns over the crop, some market participants are hoping that India may relax export restrictions on wheat.

Nonetheless, trade sources do not expect the government to relax the ban, as some believe the government may look at restocking inventories at lower prices.

Wheat stocks in government inventories have depleted rapidly due to lower procurement last year and steady outflows for government schemes and releasing of stocks. As of Feb. 1, government has 15.4 million mt wheat in its stocks, nearly halving on the year.

“The government may look at relaxing exports restrictions imposed last year but it is likely to stock up wheat required to run government schemes and cool down retail prices,” an exporter based in Mumbai said.

Tags: food grain, heatwave, harvest, export, rice, wheat, India, crop, yield, conditions, cultivation