Indian wheat reaches fresh record high due to delay in stock release
MUMBAI/NEW DELHI: Indian wheat prices hit a new record on Monday after the government delayed release of additional stocks to shore up supplies and calm shortages in the domestic market caused by last year’s poor crop.
India, the world’s second largest wheat producer, banned exports in May 2022 after a sudden rise in temperatures, even as exports increased to meet a global shortfall created by Russia’s invasion of Ukraine.
Traders say record high wheat prices despite the export ban indicate a far bigger drop in last year’s output. According to government estimates, wheat production is expected to decline to 106.84 million tonnes in 2022 from 109.59 million tonnes a year ago.
“Farmers have sold their crops, traders are running out of stock, but demand is strong,” said Gopaldas Agarwal, a trader in the central Indian city of Indore. “The demand-supply mismatch is driving up prices, and will remain stable till supplies from the new season’s crop start.”
Farmers sow wheat in October and November, harvesting in March.
Wheat prices in the Indore market – a benchmark – have risen nearly 7% to a record Rs 29,375 ($361.09) a tonne so far this month after rising 37% in 2022.
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In New Delhi, the price of wheat rose by nearly 2 per cent to a record high of Rs 31,508 on Monday.
A dealer with a global trading firm said local wheat prices could rise by 5% to 6% if the government does not release stocks in the next 15 days. He did not want to be named as per his company’s policy.
“Even bulk consumers such as wheat flour millers are struggling with short supply and high prices,” said Rajesh Paharia Jain, a trader in New Delhi. “Clearly, for the government, there is no time for procrastination.”
Officials have repeatedly said the government will offer 2 to 3 million tonnes of wheat from its stockpiles to help flour millers and biscuit makers as part of efforts to bring down record-high prices.
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