Required Report - public distribution

**Date:** 1/10/2007

**GAIN Report Number:** IN7002

IN7002

**India**

**Grain and Feed**

**Monthly Lock-up Report: January**

**2007**

**Approved by:**

![](media/image1.wmf)Holly Higgins

U.S. Embassy, New Delhi

**Prepared by:**

A. Govindan

**Report Highlights:**

The MY 2006/07 rice production estimate is revised up to 90.5 million
tons and CY 2006 rice exports are estimated at 4.0 million tons.
Following the import of 5.5 million tons of wheat by the government, the
wheat stocks situation is expected to improve marginally. Private
imports in MY 2006/07 are estimated at 800,000 tons, taking MY 2006/07
imports to 6.3 million tons. Wheat planted area in 2007 is up and
production is initially expected to be higher than last year. The level
of government wheat procurement from the 2007 crop will be the most
crucial factor influencing the government's position on wheat imports
this year.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

New Delhi \[IN1\]

\[IN\]

# RICE

# 

# MY 2006/07 Production Estimate Up

Post revised the MY 2006/07 (Oct-Sep) rice production estimate upward to
90.5 million tons from the earlier estimate of 89 million tons. Better
than anticipated *kharif* (fall and early winter harvested) rice
production in major rice growing states of Andhra Pradesh and
Chattisgarh, combined with likely higher *rabi* (summer harvested) rice
production in several states is responsible for the upward revision.
Despite cyclonic storms and drought in some parts of the state, rice
production in Andhra Pradesh is expected to match or exceed last year's
near record production of 11.7 million tons. In Chattisgarh, despite the
late arrival of the monsoon, production is expected to be better than
last year's 5.4 million tons, perhaps a record, because of the excellent
distribution of rains. Higher rice production in these two states is
reflected in the larger accumulated procurement of rice so far by the
government.

# Procurement Marginally Lower 

Overall accumulated procurement of rice by the government in MY 2006/07
through December 2006 was 400,000 tons below last year's level at 12.9
million tons, with the decline mostly confined to Punjab and Haryana.
However, procurement in most other states was higher than last year. The
table below shows procurement by state in MY 2006/07 through December
29, 2006, compared with last year. However, with likely higher
procurement from Chattisgarh, Orissa, and Andhra Pradesh, MY 2006/07
procurement is likely to reach or surpass the MY 2005/06 level.

**Rice Procurement by State for MY 2006/07 Vs. MY 2005/06 (100,000
tons)**

Source: Department of Food & Public Distribution, GOI

# Stocks Higher

Government-held rice stocks on December 1, 2006 were 12.1 million tons,
compared with 11.1 million tons a year ago, but significantly below the
record December 1 stocks of 25.1 million tons in 2001. A record
procurement of 27.7 million tons in MY 2005/06 helped to rebuild stocks,
despite more distribution of rice through the public distribution system
(PDS) in CY 2006, to compensate for the reduced wheat allocation.

# Rice Exports Remain Strong

Indian rice, particularly parboiled rice, continues to remain
competitive in the world market, resulting in larger exports. In recent
months, India has been exporting around 300,000 tons of rice per month,
mostly parboiled. Exporters are sourcing rice mostly from Andhra
Pradesh, Chattisgarh, and Orissa and exporting mostly through the port
of Kakinada in Andhra Pradesh. Indian 5% broken parboiled rice is quoted
at around \$265 (FOB Kakinada), which is reportedly much lower than the
price quoted for Thai parboiled rice.

According to preliminary official statistics, rice exports during
January through August totaled 2.9 million tons (including around
700,000 tons of basmati). Total CY 2006 exports are now estimated at 4.0
million tons, marginally higher than Post's earlier estimate of 3.8
million tons.

# WHEAT

**Planted Area Up**

According to official reports, area planted to wheat through January 5,
2007, was 27.6 million hectares compared with 25.8 million hectares
planted during the corresponding period of last year. It is expected
that total MY 2007/08 (Apr-Mar) wheat planted area could reach around 28
million hectares compared with 26.7 million hectares in MY 2006/07. Most
of the increase in area was at the expense of rapeseed/mustard due to
lower rapeseed prices and high carry-in stocks. Although planting
reports point toward the possibility of a larger wheat harvest, actual
production will largely depend on the weather conditions through
harvest. The cool weather since mid-December is conducive for higher
yields, but the most crucial factor is the temperature in February
through March. Past experience shows that higher temperature during this
critical grain filling stage could adversely affect yields. Lack of
winter rains also could have a negative impact on yields, particularly
in the non-irrigated wheat growing regions of Madhya Pradesh. The
Government forecast for 2007 wheat production is around 74 million tons,
while private forecasts range from 72 to 76 million tons. Post will
release the intial 2007 forecast in February.

# Stocks Situation Expected to Improve

Following the arrival of around 3.0 million tons of imported wheat
through November 2006, out of the total contracted quantity of 5.5
million tons by the government, wheat stocks with the government reached
5.6 million tons on December 1, 2006, compared with 7.6 million tons a
year ago. With the likely arrival of the balance quantity of around 2.5
million tons of wheat through March 2007, combined with reduced
allocation of wheat through the PDS, wheat stocks on April 1, 2007, are
likely to be around 3.5 million tons. This compares with 2.1 million
tons on April 1, 2006, but still below the government's desired minimum
April 1 buffer stock level of 4 million tons. Hence, the amount of
government wheat procured from the 2007 crop could be the most crucial
factor influencing the government's wheat import decision this year.
Although prices are expected to decline from the current high level of
around rs. 10,900 (\$248) per ton in Delhi following the arrival of the
new crop in April, it is doubtful whether prices would drop to the
government's support level of rs. 7,500 (\$170.5) per ton in most
surplus states. This is primarily due to the probable increase in wheat
purchased by the private trade and millers. If the government fails to
procure at least 12 to 13 million tons of wheat in MY 2007/08, compared
with 9.2 million tons procured in MY 2006/07, imports would become
necessary to meet the requirements of the PDS and to maintain the
desired minimum buffer stock level.

**Government Extends duty-free wheat imports through February 2007**

In December, 2006, the government granted a two-month extension for
duty-free wheat imports by private traders until February 28, 2007. In
September, the government had cut the import duty on wheat to zero from
the previous 5 percent until December 31, 2006, to increase the
availability of wheat and to keep prices in check. Importers will still
be allowed to import wheat at 5 percent duty till March 31, 2006, after
which it will attract a 50 percent duty. The government notification
regarding this is available at:
[www.cbec.gov.in/cae/customs/cs-act/notifications/notfns-2k6/cs116-2k6.htm](http://www.cbec.gov.in/cae/customs/cs-act/notifications/notfns-2k6/cs116-2k6.htm).

The government has also notified the extension of the partially relaxed
phytosanitary standards for wheat beyond the December 31, 2006, deadline
up to February 18, 2007. The government notification regarding this is
available at:
[www.plantquarantineindia.org/pdffiles/Validity%20extension%20order%20of%20OGL%20dated%20291206.pdf](http://www.plantquarantineindia.org/pdffiles/Validity extension order of OGL dated 291206.pdf)

Despite this extension, India's phytosanitary standards are considered
overly restrictive and preclude U.S. exports to India. These standards
are not in line with international norms and result in a higher purchase
price by Indian importers. Based on September International tenders,
Indian purchase prices exceeded those by other major wheat importers
purchasing similar or better quality wheat. Despite these Indian
imports, domestic consumer prices for wheat and flour remain high given
current international prices.

According to government sources, wheat imports on the private account
through December 2006 had totaled around 750,000 tons, with some small
additional imports likely through March 2007, taking total MY 2006/07
wheat imports to around 6.3 million tons. The PS&D table has been
revised to reflect this change.

**Table 1: Commodity, Rice, Milled PSD**

<table>
<colgroup>
<col style="width: 17%" />
<col style="width: 6%" />
<col style="width: 2%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 4%" />
<col style="width: 4%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PSD Table</strong></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td><strong>India</strong></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="3"><p><strong>Rice,</strong></p>
<p><strong>Milled</strong></p></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="3"><p>(1000 HA)</p>
<p>(1000 MT)</p>
<p>(MT/HA)</p></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td colspan="2">2004</td>
<td>Revised</td>
<td></td>
<td>2005</td>
<td>Estimate</td>
<td></td>
<td colspan="2">2006</td>
<td>Forecast</td>
<td></td>
<td>UOM</td>
</tr>
<tr class="odd">
<td></td>
<td colspan="2">USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td colspan="2">USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td colspan="2"></td>
<td>10/2004</td>
<td>10/2004</td>
<td></td>
<td>10/2005</td>
<td>10/2005</td>
<td colspan="2"></td>
<td>10/2006</td>
<td>10/2006</td>
<td>MM/YYYY</td>
</tr>
<tr class="odd">
<td><p>Area</p>
<p>Harvested</p></td>
<td colspan="2">42300</td>
<td>42300</td>
<td>42300</td>
<td>43400</td>
<td>43400</td>
<td>43400</td>
<td colspan="2">44000</td>
<td>44000</td>
<td>44000</td>
<td>(1000 HA)</td>
</tr>
<tr class="even">
<td><p>Beginning</p>
<p>Stocks</p></td>
<td colspan="2">10800</td>
<td>10800</td>
<td>10800</td>
<td>8500</td>
<td>8500</td>
<td>8500</td>
<td colspan="2">10520</td>
<td>10520</td>
<td>10520</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td><p>Milled</p>
<p>Production</p></td>
<td colspan="2">83130</td>
<td>83130</td>
<td>83130</td>
<td>91040</td>
<td>91040</td>
<td>91040</td>
<td colspan="2">91000</td>
<td>89000</td>
<td>90500</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td><p>Rough</p>
<p>Production</p></td>
<td colspan="2">124707</td>
<td>124707</td>
<td>124707</td>
<td>136574</td>
<td>136574</td>
<td>136574</td>
<td colspan="2">136514</td>
<td>133513</td>
<td>135764</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Milling Rate (.9999)</td>
<td colspan="2">6666</td>
<td>6666</td>
<td>6666</td>
<td>6666</td>
<td>6666</td>
<td>6666</td>
<td colspan="2">6666</td>
<td>6666</td>
<td>6666</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>MY Imports</td>
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>TY Imports</td>
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>TY Imp. from U.S.</td>
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td><strong>Total Supply</strong></td>
<td colspan="2"><strong>93930</strong></td>
<td><strong>93930</strong></td>
<td><strong>93930</strong></td>
<td><strong>99540</strong></td>
<td><strong>99540</strong></td>
<td><strong>99540</strong></td>
<td colspan="2"><strong>101520</strong></td>
<td><strong>99520</strong></td>
<td><strong>101020</strong></td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>MY Exports</td>
<td colspan="2">4687</td>
<td>4687</td>
<td>4687</td>
<td>3800</td>
<td>3800</td>
<td>4000</td>
<td colspan="2">4300</td>
<td>4000</td>
<td>4300</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>TY Exports</td>
<td colspan="2">4687</td>
<td>4687</td>
<td>4687</td>
<td>3800</td>
<td>3800</td>
<td>4000</td>
<td colspan="2">4300</td>
<td>4000</td>
<td>4300</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>Total Consumption</td>
<td colspan="2">80743</td>
<td>80743</td>
<td>80743</td>
<td>85220</td>
<td>85220</td>
<td>85020</td>
<td colspan="2">87500</td>
<td>86000</td>
<td>87000</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Ending Stocks</td>
<td colspan="2">8500</td>
<td>8500</td>
<td>8500</td>
<td>10520</td>
<td>10520</td>
<td>10520</td>
<td colspan="2">9720</td>
<td>9520</td>
<td>9720</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td><strong>Total Distribution</strong></td>
<td colspan="2"><strong>93930</strong></td>
<td><strong>93930</strong></td>
<td><strong>93930</strong></td>
<td><strong>99540</strong></td>
<td><strong>99540</strong></td>
<td><strong>99540</strong></td>
<td colspan="2"><strong>101520</strong></td>
<td><strong>99520</strong></td>
<td><strong>101020</strong></td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Yield (Rough)</td>
<td colspan="2">2.948156</td>
<td>2.948156</td>
<td>2.948156</td>
<td>3.146866</td>
<td>3.146866</td>
<td>3.146866</td>
<td colspan="2">3.102591</td>
<td>3.034386</td>
<td>3.085545</td>
<td>(MT/HA)</td>
</tr>
</tbody>
</table>

**Table 2: Commodity, Wheat, PSD**

<table>
<colgroup>
<col style="width: 16%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 6%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>PSD Table</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td><strong>India</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="2"><strong>Wheat</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"><p>(1000 HA)</p>
<p>(1000 MT)</p>
<p>(MT/HA)</p></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td>2004</td>
<td>Revised</td>
<td></td>
<td>2005</td>
<td>Estimate</td>
<td></td>
<td>2006</td>
<td>Forecast</td>
<td></td>
<td>UOM</td>
</tr>
<tr class="odd">
<td></td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td></td>
</tr>
<tr class="even">
<td>Market Year Begin</td>
<td></td>
<td>04/2004</td>
<td>04/2004</td>
<td></td>
<td>04/2005</td>
<td>04/2005</td>
<td></td>
<td>04/2006</td>
<td>04/2006</td>
<td>MM/YYYY</td>
</tr>
<tr class="odd">
<td>Area Harvested</td>
<td>26620</td>
<td>26620</td>
<td>26620</td>
<td>26500</td>
<td>26500</td>
<td>26500</td>
<td>25000</td>
<td>26700</td>
<td>26700</td>
<td>(1000 HA)</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>6900</td>
<td>6900</td>
<td>6900</td>
<td>4100</td>
<td>4100</td>
<td>4100</td>
<td>2000</td>
<td>2000</td>
<td>2000</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>72150</td>
<td>72150</td>
<td>72150</td>
<td>68640</td>
<td>68640</td>
<td>68640</td>
<td>68000</td>
<td>69480</td>
<td>69480</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>MY Imports</td>
<td>8</td>
<td>8</td>
<td>8</td>
<td>32</td>
<td>0</td>
<td>32</td>
<td>6000</td>
<td>4500</td>
<td>6300</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>TY Imports</td>
<td>14</td>
<td>14</td>
<td>14</td>
<td>118</td>
<td>100</td>
<td>118</td>
<td>6000</td>
<td>4400</td>
<td>6300</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>TY Imp. from U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td><strong>Total Supply</strong></td>
<td><strong>79058</strong></td>
<td><strong>79058</strong></td>
<td><strong>79058</strong></td>
<td><strong>72772</strong></td>
<td><strong>72740</strong></td>
<td><strong>72772</strong></td>
<td><strong>76000</strong></td>
<td><strong>75980</strong></td>
<td><strong>77780</strong></td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>MY Exports</td>
<td>2120</td>
<td>2120</td>
<td>2120</td>
<td>801</td>
<td>740</td>
<td>801</td>
<td>500</td>
<td>200</td>
<td>200</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>TY Exports</td>
<td>1605</td>
<td>1605</td>
<td>1605</td>
<td>369</td>
<td>800</td>
<td>369</td>
<td>500</td>
<td>200</td>
<td>200</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>Feed Consumption</td>
<td>500</td>
<td>500</td>
<td>500</td>
<td>300</td>
<td>300</td>
<td>300</td>
<td>300</td>
<td>300</td>
<td>300</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>FSI Consumption</td>
<td>72338</td>
<td>72338</td>
<td>72338</td>
<td>69671</td>
<td>69700</td>
<td>69671</td>
<td>72200</td>
<td>73480</td>
<td>73780</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td>Total Consumption</td>
<td>72838</td>
<td>72838</td>
<td>72838</td>
<td>69971</td>
<td>70000</td>
<td>69971</td>
<td>72500</td>
<td>73780</td>
<td>74080</td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Ending Stocks</td>
<td>4100</td>
<td>4100</td>
<td>4100</td>
<td>2000</td>
<td>2000</td>
<td>2000</td>
<td>3000</td>
<td>2000</td>
<td>3500</td>
<td>(1000 MT)</td>
</tr>
<tr class="even">
<td><strong>Total Distribution</strong></td>
<td><strong>79058</strong></td>
<td><strong>79058</strong></td>
<td><strong>79058</strong></td>
<td><strong>72772</strong></td>
<td><strong>72740</strong></td>
<td><strong>72772</strong></td>
<td><strong>76000</strong></td>
<td><strong>75980</strong></td>
<td><strong>77780</strong></td>
<td>(1000 MT)</td>
</tr>
<tr class="odd">
<td>Yield</td>
<td>2.710368</td>
<td>2.710368</td>
<td>2.710368</td>
<td>2.590189</td>
<td>2.590189</td>
<td>2.590189</td>
<td>2.72</td>
<td>2.602247</td>
<td>2.602247</td>
<td>(MT/HA)</td>
</tr>
</tbody>
</table>