India sees good harvest

India expects a good harvest of rice, corn and soybean this year, and may release 6 million tonnes of wheat into the local market to further ease prices, farm minister Sharad Pawar said, raising hopes export curbs may be relaxed.

Pawar told reporters that India had seen adequate and well-distributed monsoon rains, adding government incentives encouraging farmers to use fertilisers would boost farm output.

India had to import wheat in each of the past two years, and this year it clamped down on rice and corn exports and cut import duties on edible oils as part of efforts to tame inflation that hit a 13-year high of 11.89 percent in end-June.

"We are hopeful of a rich harvest, especially of rice, maize and soybean," Pawar told a conference.

The weather office said in a statement monsoon rains were 6 percent above normal so far but the distritution was uneven. Rainfall was 77 percent above normal in the northwest but 34 percent below the long-term average in southern India.

Pawar said the government would take a decision on selling wheat in the domestic market by Thursday.

"We are planning open-market sales of six million tonnes of wheat," Pawar told reporters. He said prices of the grain were rising in some parts of the country.

Traders said pricing of the grain would determine the impact.

"They will have to sell below their economic cost ... The government has procured at higher levels and incurred the cost of holding and transporting grains," a New Dehi-based trader said.

A trader in Singapore said the move to sell wheat in the open market signalled a good harvest.

"Some quantities might make it to the international market. There is surplus production for both wheat and corn, I hope India resumes exports," he said. India's government bought a record 22.5 million tonnes of wheat from farmers this year, filling its granaries and easing concerns of scarcity.

Pawar said India was likely to buy 27.5 million tonnes of rice from farmers by the end of the crop year to September.

The country has banned exports of non-basmati rice and the government has said in the past that it would review the ban only by November, after assessing the new harvest.

Pawar said India was also sending half a million tonnes of rice to Africa as promised by Prime Minister Manmohan Singh at the recent G-8 summit.

The country has also shipped 186,305 tonnes of rice to neighbouring Bangladesh, part of the 500,000 tonnes it had offered Dhaka after the country was ravaged by a cyclone last November.