Sugar, Wheat Export Bans May Ease as India Predicts Normal Rain.

India, the world’s second-biggest sugar and wheat producer, may ease restrictions on exports as the nation receives normal monsoon rainfall for a second year, according to Agrocorp International Pte.

Rain will be 98 percent of the 50-year average in the June- September season, the India Meteorological Department said yesterday. The bureau defines normal precipitation as 96 percent to 104 percent of the long-term average.

The rain may boost production of rice, wheat, corn and lentils to a record for a second year, spurring exports and capping global food prices that the United Nations estimates advanced to a record in February. India’s 235 million farmers depend on rain for irrigating crops. Agriculture makes up a fifth of the economy and a bumper harvest will boost rural incomes, lifting sales of tractors, cars and refrigerators.

“The government will consider lifting the ban on exports” of wheat, Vijay Iyengar, managing director of Agrocorp International, a Singapore-based commodity trading company, said by phone yesterday. “There are huge stocks and a storage problem is also there.”

The country banned shipments of wheat in early 2007 and non-basmati rice in April 2008 to bolster domestic supplies. State reserves of rice and wheat totaled 44.2 million tons on April 1, more than double the emergency stockpile requirement, according to the Food Corp. of India.

A panel of ministers will decide whether to allow overseas sales, Food Minister K.V. Thomas said on April 11.
More Sugar

An increase in sugar output may boost shipments and higher oilseeds output may trim overseas purchases of palm oil, Agrocorp’s Iyengar said. India is the world’s biggest palm oil importer and buys the cooking oil from Indonesia and Malaysia, the largest producers.

India, the second-largest sugar grower, may produce at least 5 percent more refined sugar in the year that begins Oct. 1, Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd., said on April 13. The government yesterday set rules for shipment of 500,000 tons of sugar over the next 4-1/2 months.

Production of food grains from rice to wheat, lentils and corn is estimated to climb 8 percent to a record 235.88 million metric tons in the year ending June after a normal monsoon last year, Agriculture Minister Sharad Pawar said April 6. That may prompt the government to lift bans on exports of wheat and non- basmati rice, Citigroup Inc. said on April 11.
Monsoon ‘Crucial’

Prime Minister Manmohan Singh is betting on normal rains to tame food inflation after it averaged 18 percent in 2010. India’s benchmark wholesale-price index advanced 8.98 percent in March from a year earlier after an 8.31 percent gain in February, the commerce ministry said on April 15.

The monsoon will be “crucial this year both from the inflation perspective” as well as a driver of growth, Anubhuti Sahay, a Mumbai-based economist at Standard Chartered Plc, said by phone yesterday. “If we don’t have a good monsoon, the higher commodity prices globally, plus higher food prices will push up inflation significantly.”

Sowing of monsoon crops begins in June and harvesting starts in September. The monsoon typically sets over the southern Kerala state by the first week of June and before blanketing the entire nation by July 15. Actual rainfall may be 5 percent more, or less than the 98 percent predicted, the bureau said yesterday.

Rainfall last year was 102 percent of the 50-year average, boosting water levels in dams. Growth is moderating and “if the monsoon turns out to be bad, then the rural consumption which is very important can be hit too,” Standard Chartered’s Sahay said. “It’s very closely watched by the policy makers.”

The Reserve Bank of India has increased rates eight times since March 2010, while factory output advanced 3.6 percent in February from a year ago, down from a gain of 15.1 percent in the same month last year, the government said last week.

Source : bloomberg.com