Doubt Over Australian Wheat Crop Size

Mumbai: India could be running the risk of a forced foray into the international wheat market at a time when world market conditions have begun to turn somewhat scary. While the northern hemisphere wheat crop is advancing reasonably well and crop conditions remain favourable, there is a trouble brewing in Australia. Reports suggest that Australia is reeling under a severe drought and agricultural production may take a hit. At 15-16 million tonnes (mt), Australia accounts for about 15 per cent of the global wheat exports. Last year October 2006 too drought affected the Australian wheat crop which fell by an alarming 60 per cent to a mere 10 mt (25 mt previous year). A large opening stock (9.5 mt ) saved the situation. As a result, Australia's wheat exports plunged by a third to 10 mt (mt).
The world market is hoped to take cognisance of the development soon. A four per cent increase in wheat acreage for 2007-08 had so far kept the sentiment in check. Australian wheat is already the highest priced in the world; and, therefore, other origins such as Canada will attempt to garner a larger share of the market that Australia likely to be forced to vacate. For India, it would mean paying more for wheat. Current import prices are in the range of $225-240 a tonne cost and freight. The only silver lining is the firming rupee that may partially neutralise an imminent rise in international wheat prices. Open market prices too have not softened.