Buoyancy in wheat, maize triggers warehousing demand

The buoyancy in the grains market, especially wheat and maize is attracting the stockists’ interests triggering demand for warehousing of the cereals. Sources said stockists have turned active with wheat in States such as Madhya Pradesh and Rajasthan, from where the grain is being shipped to the overseas markets as the Indian cereal has found many overseas takers with supplies getting disrupted from the Black Sea region due to the ongoing Russia-Ukraine conflict.

“There is a good buying interest from the private trade in wheat, especially in states such as Madhya Pradesh and Rajasthan to cater to both domestic and overseas demand,” sources said.

Warehousing service providers such as NBHC and Arya.ag are witnessing good demand from exporters, processors and traders this rabi harvest season. “The demand for warehousing of grains — wheat and maize — has gone up on strong export demand. There is a huge demand for warehousing of wheat right now as the arrivals have started and people need to stock before moving to the port,” said Anand Chandra, Executive Director, Arya.ag.

Similarly, the arrivals of rabi maize are set to begin in Bihar. “People are also expecting the shipments of maize to happen. Both overseas and domestic demand is facilitating the requirement of warehousing space. The domestic processors want to secure their demand for consumption.”

“The demand is such that most of the warehouses which used to be vacant are all occupied. We may see a shortage of space now,” Chandra said.

With the government purchases likely to be sluggish as most of the commodities are ruling above MSP and on strong private demand, the trade expects the public sector warehouses to be not fully utilised this year. Till last year, the government used to take private warehouses on lease to store purchased grains. The trend is seen reversing this year and private players are seen leasing out government warehouses from agencies such as Central Warehousing Corporations and State Warehousing Corporations.

Scarcity of warehouses

“With the rabi maize crop set to hit the markets in Bihar, it is difficult to get a booking as all warehouses are booked,” said Deepak Kumar Singh, Senior Vice-President and Business Head, Procurement at NBHC.

Infact, NBHC, like some other private players, has taken some warehouses on lease from the government agencies to meet the growing demand, Singh said. While the demand for maize from the domestic processors is considered usual, this year interestingly, there is good demand from exporters, Singh added.

Enhancing capacity

Arya, which has about 30 lakh tonnes of warehousing capacity is eyeing 35 lakh tonnes by the end of season. “Eventually we may go to the government to lease warehouses, in case they are vacant,” Chandra said. “About 80 per cent of our warehousing capacity is occupied. The demand is coming from exporters and traders who are entering into wheat exports. On the maize side, the demand is from both exporters and domestic trade to secure demand for feed millers and starch players,” he said.

India, which exported around 7.75 million tonnes of wheat during 2021-22 is targetting shipment of 10 million tonnes for 2022-23. Strong overseas demand is keeping the wheat prices firm with an upward bias and the cereal has been hovering above minimum support price (MSP) levels of ₹2,015 per quintal across many markets. The government has set a wheat procurement target of 444 lakh tonnes for the current season. Wheat purchases by government agencies in various States till April 17 stood at 69.24 lakh tonnes as against 102 lakh tonnes in the same period last year.

COMMENT NOW