India hikes wheat import duty to support local farmers

Local wheat prices have fallen over 11 percent in 2019 due to ample supply from last year’s crop and forecasts of record output. (AFP)
Updated 27 April 2019

India hikes wheat import duty to support local farmers

  • It comes as Prime Minister Narendra Modi’s party looks to contain rural discontent due to lower crop prices
  • India’s wheat production will rise 2 percent in 2019 from the year before to a record 99.12 million tons, according to estimates

MUMBAI: India has raised its import duty on wheat to 40 percent from 30 percent, the government said late on Friday, as the world’s No. 2 producer of the grain tries to support local farmers.
The step comes as Prime Minister Narendra Modi’s party looks to contain rural discontent due to lower crop prices amid voting in a general election that began on April 11 and ends on May 19.
Local wheat prices have fallen over 11 percent in 2019 due to ample supply from last year’s crop and forecasts of record output. The hike in duty is likely to make imports of wheat unviable for flour mills even after recent declines in global prices , potentially dragging further on global grain markets.
“Local wheat production is higher. The government is now trying to ensure prices remain above support levels,” said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities in Mumbai.
India has raised the price at which it buys new-season wheat from local farmers by 6 percent to 1,840 rupees per 100 kg for 2019.
The government usually purchases about a quarter of such wheat from farmers at state-set prices to build stocks to run a major food welfare program.
India’s wheat production will rise 2 percent in 2019 from the year before to a record 99.12 million tons, according to estimates from the country’s agriculture department.
Only one wheat crop is grown in India each year, with planting starting in late October and harvesting in March.
Government wheat stocks stood at 17 million tons as of April 1, up nearly 30 percent from the same time a year ago.
“At 40 percent import duty, imports are not viable for flour mills. They have to buy local crop,” said a Mumbai-based grain dealer with a global trading firm. He declined to be identified as he was not authorized to speak with media.
Indian flour millers imported 1.65 million tons of wheat in the 2017/18 fiscal year, down from 5.7 million tons the year before. Those shipments were mainly from Australia, Russia and Ukraine.


Barclays sees $2 per barrel impact to oil prices as coronavirus fears threaten demand

Updated 28 January 2020

Barclays sees $2 per barrel impact to oil prices as coronavirus fears threaten demand

  • More than 100 people have died and over 4,000 cases of the new virus have been confirmed in China
  • Barclays expects the OPEC and other allies to step in and take further measures to keep the markets tight

BENGALURU: Barclays said on Tuesday oil prices will be impacted by $2 per barrel on the potential economic fallout from the coronavirus outbreak in China.
More than 100 people have died and over 4,000 cases of the new virus have been confirmed in China, leading authorities to increase preventive measures, impose travel restrictions and also extend the Lunar New Year holidays to limit the spread of the virus.
The bank sees a $2 per barrel downside to their full-year Brent and WTI forecasts of $62 per barrel and $57 per barrel, respectively.
Compounding the effects of the spillover to economic growth from China and the region, Barclays expects transitory oil demand erosion of about 0.6-0.8 million barrels per day (mb/d) in the first quarter of this year, or 0.2 mb/d for the full year.
“If air passenger traffic in China declined by half in first quarter of 2020, it would likely lead to a 300,000 barrels per day year on year decline in jet-kerosene demand from China,” the bank said adding the fall in road transport would likely be less severe than in the past given reduced reliance on buses.
Barclays expects the Organization of the Petroleum Exporting Countries and other allies to step in and take further measures to keep the markets tight, in case the fall in demand is more acute.
Oil prices have been down for the last six sessions, but the bank said that the market reaction was likely overdone.
Barclays said the actual economic fallout from the coronavirus could be less severe than the 2003 SARS outbreak, given that the new virus seems less lethal than SARS so far and the measures taken by Chinese authorities.
The bank said the geopolitical risks to global supplies remain high as US-Iran tensions could continue to gradually escalate and oil production in Libya could fall further if the blockade of key infrastructure facilities continues.
Brent crude prices are currently trading around $59 per barrel and US WTI at around at $53 per barrel.