Wheat arrivals across various agriculture produce marketing committee (APMC) yards in the country increased to a 12-year high during August-September this year even as the stocks with the Food Corporation of India (FCI) dropped to a six-year low.
Data from Agmarknet, owned by the Ministry of Agriculture and Farmers’ Welfare, showed that wheat arrivals during August-September were 57 per cent higher at 2.27 million tonnes (mt) compared with 1.44 mt in the same period a year ago. Arrivals are the highest since August-September 2010 when 4.38 mt arrived.
Arrivals between April, when wheat harvest begins, and August are at a three-year high of 20.90 mt. In 2019, the arrivals during the period were 22.95 mt, while in 2020 and 2021 they were 15.19 mt and 17.51 mt respectively. Wheat stocks with the FCI are 24.82 mt, the lowest since 2016.
Lower procurement
“The Food Secretary had said at the Roller Flour Mills Federation of India (RFMFI) annual general meeting that wheat procurement was at least 25 mt lower this year and they would have to come to the market. It is happening now,” Pramod Kumar, President, RFMFI, told businessline.
Wheat prices have almost stabilised. The weighted average price is ₹2,304.52 a quintal, the same as in September first week. Last week, the highest price for wheat was at Khategaon APMC in Madhya Pradesh’s Dewas district at ₹2,480. Arrivals at the APMC increased to 187.4 tonnes, over 100 tonnes more than the arrivals for the whole of August at 74 tonnes.
At Hardoi APMC in Uttar Pradesh, wheat prices are currently ruling at ₹2,300 after having topped ₹2,500 on August 13 and ₹2,400 on September 26. “We are not witnessing any demand as mills are fully stocked. Fearing shortage, they had bought wheat at different price points and occasions,” said a South India-based miller who did not wish to be identified.
Fears over availability
“Wheat held up at ports are now coming to the markets, though demand is slack,” said MK Dattaraj, Managing Director, The Krishna Group of mills.
“Fears were spread on availability of wheat during the festive season. DussehraDasara has got over and we will have Diwali soon. All major festivities will be over in a couple of weeks and we don’t face any shortage of wheat. We expect no problem with the availability till December,” said RFMFI President Kumar.
“If at all wheat prices have increased, it is due to freight charges as fuel has become costlier,” the South-based miller said.
A New Delhi-based analyst said big farmers who held back their wheat hoping to get higher prices have also begun to bring out their stocks with the market not showing any alarm over availability or price.
Export demand
In May this year, wheat prices ruled over ₹2,500 a quintal, a record, following export demand in view of the Ukraine war. As Ukraine and Russia account for 30 per cent of the global wheat trade, consuming nations such as Egypt looked to India to help them.
This resulted in FCI wheat procurement dropping by over 56 per cent to 18.9 mt this year compared with 43.44 mt a year ago. In view of this, and to contain rising food inflation, the Centre banned wheat exports from May 13.
Besides export demand, wheat prices gained as a heatwave that swept across the country during March-April affected the crop’s yield. This resulted in wheat production dropping from the initially estimated 111.43 mt this year.
As per the fourth advance estimate of the Ministry of Agriculture, wheat production is projected to be 106.84 mt compared with 109.59 mt last year.
On a leash
The Indian wheat export ban drove up global prices to $12.77 a bushel ($469.16 a tonne) on the Chicago Board of Trade before cooling to $8.95 ($328.82) currently.
Prices have moderated in the domestic market too, though they are still ruling higher than the minimum support price of ₹2,015 a quintal this year.
“We expect the Centre to offload some 2-3 mt around December in the open market. That will keep the market on the leash and probably, help until the new crop begins arriving in mid-February,” Kumar said.