Mumbai: The Union Government has banned exports of wheat as the crop of wheat has had a lower-than-satisfactory outlook leading to growing concerns over prices. The Agriculture Ministry''s latest estimate for the 2006-07 season rabi crop is 72.5 million tonnes (mt), down from the initial estimate of 74.0 mt and production target of 75.5 mt. Last year, wheat output was 69.5 mt. Even though production this season is anticipated to be higher by 3 mt as per the second estimate, there is a possibility of further downward revision in crop size if weather conditions turn unfavourable.

Harvest of early sown crop in major growing States is likely to commence early this season - as early as mid-to-late March as against the normal mid-April. In cognizance of the prospects of wheat crop and anticipated early arrivals, open market prices have already begun to soften. Those holding inventory are unloading stocks in the market.

Declining prices could theoretically open a small window of opportunity for exports.

The ban on export is intended to prevent even a small quantity of the grain from leaving the country. With the approach of harvest season, wheat market is expected to correct down. With procurement rate fixed at Rs750 a quintal, open market price inclusive of taxes would be around Rs850 a quintal or even lower depending on local tax structure.

Internationally, wheat prices have been ruling firm following lower production in major origins and declining stocks during 2006-07.