Indian wheat prices have increased by at least ₹100 a quintal in the past week as farmers have begun to hold back their produce hoping for higher prices.

With prices firmly ruling above the minimum support price (MSP) of ₹2,125 a quintal and private traders buying directly from them, farmers are hoping to gain from the current situation. 

The situation has resulted in the focus shifting to wheat production this year with traders and experts saying it will likely be below the Agriculture Ministry’s estimate of 112.18 million tonnes (mt). 

Not offering FCI

“Farmers are not bringing their produce to the markets. Last year, they got as much as ₹3,000 a quintal and are hoping they will get similar prices this year too,” said Pramod Kumar, President, Roller Flour Mills Federation of India. 

“There is a good demand for wheat from the trade. Farmers are smart and they are not offering their produce to the Food Corporation of India (FCI) at MSP for the Central pool stocks,” said BK Singh, Chairman and Managing Director, BKC Aggregator Pvt Ltd, which runs the “Fasal Salah” app. 

This has been particularly true in Uttar Pradesh where farmers have tended to sell to private traders than offer their produce to FCI. 

Current prices

“I am holding back the wheat that I produced this year. The yield has been affected due to weather-related problems but I am not selling hoping to get a better price,” said Jaikishore Singh, a farmer in Uttar Pradesh’s Chandauli district. 

“Farmers are looking at the gains they made last year. They expect prices to go up further,” said MK Dattaraj, Managing Director, The Krishna Group of mills.

Currently, the weighted average price of wheat is ₹2,219 a quintal. However, in Delhi’s Narela agricultural produce marketing committee (APMC) yard, its modal price (the rate at which most trade takes place) is ₹2,350. 

“We are getting around ₹2,400 at our doorstep from private traders for our wheat,” said Singh. In Uttar Pradesh’s Hardoi APMC, wheat is quoted at ₹2,225.

FCI procurement 

“The government was lucky to get over 25 mt of wheat this year,” said Adi Narayan Gupta, a New Delhi-based miller. 

The Food Corporation of India (FCI), which procures wheat for the Central pool stocks, has been able to procure about 26.5 mt till now. “The FCI might end up getting 27 mt of wheat stocks for the Central pool,” said Gupta.

Wheat prices are gaining as the market view is that production this year could be lower than 105 mt. The US Department of Agriculture has estimated India’s wheat crop at 104 mt against 109.59 mt in 2022. A survey carried out by the Roller Flour Mills Federation has estimated the production at 104.24 mt. 

“Due to late rains and heat waves impacting wheat in the growing regions, our estimate this year is between 105.20 mt and 107.30 mt,” said Prasanna Rao, co-founder and CEO, Arya.ag.

Mills yet to stock up

“Wheat production this year is lower than last year,” said BK Singh. An Indian chief of a multinational exporting firm said production could be lower than 100 mt and the country might have to look at imports. 

“There is nothing to worry on the supply front; we have global parity at $280 a tonne” said Kumar. 

However, some flour mills say they haven’t stocked up with some saying that they usually purchase stocks now but the surge in prices has put them in a spot.

“It is good that the Food Ministry has said it will consider the open market sale scheme (OMSS) for wheat in July,” a miller said. 

Export ban

Earlier this year, when wheat prices soared above ₹33 a kg, the Centre came up with the OMSS bringing down the grain’s prices. OMSS was discontinued after March as the new crop arrived in the markets by then and the Centre did not want to deny farmers at least the MSP. 

India’s wheat crop has been affected by weather-related events — heat wave and unseasonal rains — in 2022 and 2023. In addition, exports of over 7 mt wheat last year have resulted in tight supplies. 

The Centre had to ban wheat export to keep prices on leash. The ban is expected to continue this year, too.

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