The astounding progress in wheat and Rabi rice sowing is insisting on the hope that it would offset the dent in total foodgrain production. India’s Kharif foodgrain production is estimated to drop by 6.2 per cent year-on-year to 146.39 million metric tonnes (MMT) mainly due to a fall in rice production. India’s rice production for the crop year 2022-23 declined by 11.12 per cent year-on-year to 99.33 MMT from the previous year’s production of 111.76 MMT. Poor dispersion of monsoon rains in North and East India resulted in persistent dryness which impacted the acreages and yield negatively. Even the late-season rains played a spoilsport which lowered the yields. Production is reduced in Uttar Pradesh by 18 per cent, West Bengal 16 per cent, Bihar 12 per cent, Haryana and Odisha 4 per cent each and Chhattisgarh by 2 per cent.
Meanwhile, the Rabi paddy sowing which takes a share of 14 per cent in total paddy production, it remains 13.6 per cent higher than the previous year at 12.64 lakh hectares as of December 16, 2022. The brighter prospects of Rabi season rice production are likely to offset the Kharif crop losses up to a certain extent. The Central government is aggressively procuring paddy through the Food Corporation of India (FCI) to fill up their granaries, the paddy procurement for 2022-23 reached 417.05 lakh MT till December 15, 2022 which is around 19 per cent higher than the same period last year. The paddy procurement target for 2022-23 is 775.72 lakh MT, looking at the current procurement pace they would cross the procurement target. The increment in paddy procurement resulted in an increase in the central pool stocks of unmilled paddy as of December 1, by 41 per cent month-on-month to 37.15 million MT, it remains 4 per cent higher year-on-year. Meanwhile, rice stocks in the central pool were 11.54 million MT, which is 30 per cent lower month-on-month and 46 per cent lower year-on-year. The price outlook for rice remains bullish in the short to medium term.
India’s wheat production for crop year 2023-24 is expected to increase in the range of 10-13 per cent from the previous year, thanks to the higher sowing progress amid better subsoil moisture left by the late-season rains. The increase in wheat acreages is attributed to the record-high wheat prices throughout the year 2022 which encouraged the farmers to switch to wheat. Wheat prices are trading near Rs.2,935 per quintal higher by 35 per cent from the same period the previous year, it is trading 38 per cent higher than the minimum support price (MSP) of Rs. 2,125 per quintal.
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However, the only caveat which may impact the wheat crop yield is the above-normal temperatures in the previous weeks, but the recent turnaround in weather with cold-wave and dip in temperatures across the northern part of India may boost the crop health. Recently, the stock situation with the central pool is tight with about 19.03 million MT stock available as of December 1, which is 10 per cent lower month-on-month and 50 per cent lower year-on-year. We expect by the end of March 2023 wheat stocks would be around 11 million MT, which is 3.54 million MT higher than the buffer norm. Wheat prices would trade bullish in the short term and are likely to touch Rs. 3100 per quintal. Prices would start cooling off once there is clarity on the new crop size in the later months.
In the feed grains segment, maize is the largest crop in India. India’s maize production for the Kharif crop of 2022-23 declined by 2.1 per cent year-on-year to 21.31 million MT from the previous year’s production of 21.95 million MT. Production declined in the key maize-growing states of Madhya Pradesh by 2 per cent, Karnataka by 7 per cent, Uttar Pradesh by 5 per cent, Maharashtra by 1 per cent and Telangana by 24 per cent while production increased in Rajasthan by 3 per cent. The reason for lower production is poor yields in the key producing districts of Madhya Pradesh, Karnataka, Telangana, Maharashtra and Uttar Pradesh due to heavy rainfall in October resulting in damage to the standing crops.
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Meanwhile, the Rabi season maize sowing is progressing well and the acreage remains higher by 22.7 per cent year-on-year at 13.47 lakh hectares. Higher acreages amid conducive weather are hinting at a higher Rabi maize production this year which would offset the production loss of Kharif season up to some extent. On the other hand, domestic demand is expected to grow by 2 per cent year-on-year with demand an uptick in demand from the poultry and starch industry. On the trade front, maize exports would drop by about 1 million MT year-on-year to 2.50 million MT as the Southeast Asian nations would shift to South American corn due to their competitive quotes. Maize prices would trade firm in the short term in the range of Rs. 2,200 to Rs. 2,300 per quintal.
The second most important feed grains which are used in cattle and poultry feed is bajra. The production of bajra in this Kharif season was 9.56 Million MT, 8 per cent higher than the previous year. Production increased in the states of Rajasthan, Uttar Pradesh, Haryana and Gujarat. On the consumption front, bajra consumption increased by 4 per cent year–on–year in which the feed demand increased by 3 per cent and food demand increased by 4 per cent year-on-year. Bajra prices would trade firm in the range of Rs. 2,100 to Rs.2,160 per quintal.
In the feed meal segment, soybean meal is widely used as a source of protein in the poultry industry in India. In the crop year 2022-23, soybean meal production in India is estimated at 8.5 million MT, higher by 23.5 per cent year-on-year. Higher soybean production coupled with higher carryover stocks from the previous year and positive crush margins are likely to keep the soybean meal production on the higher side. On the domestic demand front, feed consumption is expected to grow by 2.5 per cent year-on-year to around 6.70 million MT. On the trade front, soybean meal export from October to November 2022 was 2 lakh MT, higher by 48 per cent from the same period last year. The total export commitment to date was around 2.5 to 3 lakh MT. Soybean meal exports for the entire 2022-23 is estimated at 1.00 million MT, up by 0.34 million MT from the previous year. Soybean meal prices would trade bullish in the short term in the range of Rs. 41,500 to 43,500 per MT. India’s Rabi foodgrain production for crop year 2023-24 is expected to increase in the range of 10-13 per cent.
(Major Rajiv Yadav is the Senior Vice President- Supply Chain Business of Origo Commodities. Views and analysis expressed in the article are author’s own).