Trade survey sees India's 2022-23 wheat crop below ministry's forecast of record high

India's wheat harvest is expected to rise to 107 million-108 million mt in the marketing year 2022-23 (April-March) from 102 million mt a year ago on the back of higher yields and favorable weather, an S&P Global Commodity Insights survey of 11 analysts and traders has found.

The trade estimate is lower than the Ministry of Agriculture's projection on Feb. 14 of 112.2 million mt, a record high.

Trade estimates for India's wheat output in the previous year were also lower than the government's initial projection of 111.3 million mt, which was subsequently lowered to 107.7 million mt.

"Although the acreage is largely steady on year, the yield is likely to be good due to favorable weather," an official with a multinational grain trading firm said.

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.

The likely rise in output is expected to ease prevailing supply tightness and bring down prices.

Wheat prices in India's domestic markets have skyrocketed since last April due to supply shortages and surging export demand, rising over 35% on the year to Rupees 31,500/mt ($386.40/mt) due to the continuing tight supply.

Rising prices of wheat, a staple food grain in India, have forced the government to ban exports and release stocks from buffer reserves.

Favorable weather

Wheat acreage for MY 2022-23 stood at 34.1 million hectares, against 34 million hectares the previous year, Ministry of Agriculture showed.

"The output is likely to increase but not too much as the sown area under wheat was largely steady," a trader in Delhi said. "The output may be smaller than the estimates."

The seeded area increased in major states such as Madhya Pradesh and Bihar while remaining steady on the year in states such as Punjab, Rajasthan and Gujarat and declining in Uttar Pradesh and Haryana.

Winter rains in India between Jan. 1 and Feb. 14 were 27% lower than average at 19.8 mm, according to Meteorological Department data. However, showers have been comparatively better in key wheat growing states.

Showers during the ripening stage typically lift crop yield, increasing the overall output, an agricultural scientist with the Indian Council of Agricultural Research told S&P Global.

Export hopes

On the back of a likely rise in supply, some market participants are hoping that India will relax export restrictions.

India imposed a ban on wheat exports on May 13 last year due to rising wheat prices and tight supply.

The country had emerged as a key supplier of wheat in MY 2021-22 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 MY 2022-23, up from 7.85 million mt in MY 2021-22.

However, exports dipped after the restrictions were imposed.

Nonetheless, trade sources did not expect a large volume of Indian wheat exports over the next few months, with some expecting the government to look to rebuild inventories at lower prices before relaxing the restrictions.

"The government may look at relaxing exports restrictions imposed last year after it is able to stock up wheat required to run government schemes and the retail prices are under control," an exporter based in Mumbai said.