India rice stocks swell; local purchases drop

India's rice stocks at government warehouses more than doubled on Jan. 1 even as purchases of the grain by state agencies dropped 1.1 percent since the beginning of the marketing year in October.

Traders say higher stocks will obviate import needs of India, the world's second-biggest producer of rice.

Government officials said the country's rice stocks were at 24.3 million tonnes on Jan. 1, more than double the target of 11.8 million tonnes.

But purchases from local farmers dropped 1.1 percent from a year ago to 16.8 million tonnes between Oct. 1 and Jan. 10.

The northern state of Punjab, a leading producer, bought 9.2 million tonnes of rice from local farmers from Oct. 1, up from 8.1 million tonnes a year ago.

Purchases by neighbouring Haryana state were at 1.8 million tonnes year-on-year against 1.4 million tonnes.

Although purchases rose in the two key northern states, procurement fell in other states, the officials said.

Slowing procurement did not signal import needs, traders said.

"I do not see any need for imports. We have sufficient stocks. In my view, procurement will not drop to a level where we need to import," said Vijay Sethia, a big exporter and past president of the All India Rice Exporters Association.

India's summer-sown rice output is expected to drop 15.3 million tonnes to 71.65 million tonnes after the worst drought since 1973 ravaged the crop planted during the rainy months of June and July.

While bulging rice stocks ease fears of a shortage, rising wheat inventory will add to storage concerns, analysts say.

Government officials said stocks of wheat at government warehouses were at 23.0 million tonnes on Jan. 1, nearly three times the targeted 8.2 million tonnes.

"Close on the heels of a bumper output last year, the government expects farmers to produce 2 million tonnes more than last year. Where will the government store wheat?" asked Ranji Panicker, head of research with MF Global Commodity India.

Wheat output in India, the world's second-biggest producer, was at a record 80.6 million tonnes in 2009.