Agri Business

Wheat prices, arrivals drop in many states following ban on exports

Prabhudatta Mishra | | Updated on: May 16, 2022

Farmers, traders still hopeful prices will rule higher than MSP

With wheat prices in many parts of the country dropping in view of the Centre’s ban on the grain’s exports, wheat arrivals in some States have dropped over the last couple of days. Traders said the current situation could be temporary and do not see a substantial fall in prices over the coming months.

Both farmers and traders, who have wheat stocks, are still hopeful of realising better rates whenever they bring the grains to the market.

“Before the ban, wheat prices were at ₹2,250/quintal and have come down to ₹2,140 today. There was a drop of ₹40/quintal on Monday from the day before. However, it is temporary and there may not be a big fall,” said Pawan Agarwal, a trader in Ghaziabad district of Uttar Pradesh which witnessed the highest arrivals in the State during May 14-16.

Rice traders hold wheat stocks

According to the Agmarknet portal, all-India arrivals in mandis dropped nearly by half to 78,722.42 tonnes during May 14-16 from the year-ago level. The government issued a notification banning the export of wheat on May 13. In contrast, arrivals between May 1 and 13 were 10 per cent higher at 22,29,484.15 tonnes. Mandi arrivals in April were nearly at par with last year’s 109.70 lakh tonnes, data show.

“Farmers in western UP are still holding some of their crops in anticipation of further rise in prices and they have the capacity to keep it for 2-3 months,” said Agarwal. Industry sources said many rice traders in UP have also purchased wheat and they may not immediately offload unless some policy measures taken.

In Madhya Pradesh, which saw the highest arrivals among all States after the ban, mandi prices in top supplying Satna district increased to ₹2,015 on May 15 from ₹1,950 on May 14. But in Dahod (Gujarat), prices dropped to ₹2,350 and in Kota (Rajasthan), to ₹2,150, both by ₹50/quintal in a day.

As social media was flooded with messages and videos of stranded trucks loaded with wheat in Gujarat port cities, traders started protesting. According to a PTI report that quoted Gopaldas Agrawal, president of Madhya Pradesh Sakal Anaj Dalhan Tilhan Vyapari Mahasangh Samiti — a federation of wheat, pulses and oilseeds traders — about 5,000 trucks loaded with wheat are standing at Kandla (Gujarat) and Mumbai ports. The Samiti has called for a strike (to close their business) in the State on Tuesday and Wednesday in protest against the export ban.

“It is horrible. Traders have no alternative but to sell in distress and divert these loaded trucks. The problem is much bigger though,” said an expert.

Better prices for growers

A flour miller said wheat prices may not rule at elevated levels seen in the last couple of weeks. “But they will definitely rule above the minimum support price level of ₹2,015 a quintal,” the miller said.

With the Food Corporation of India procuring less than 50 per cent of wheat compared with the year-ago period, millers and other user industries will have to approach the open market for their requirements. This will ensure that growers will get better than MSP prices for most part of this year, the miller said.

However, wheat prices surged over five per cent on Monday to $12.47 a bushel  ($457.64 a tonne) for the benchmark wheat futures on the Chicago Board of Trade. The rise in global prices has resulted in India being criticised for the export ban.

But trade analysts said the global community had developed sudden love for Indian wheat after having always treated it as something fit for feed only.

Reports said Egypt would import five lakh tonnes of wheat from India and the shipments had been exempted from the ban. India, in its order, said shipments of the contracts for which letters of credit (LCs) had been opened would be allowed as also government-to-government exports.

The Centre has also made it clear even private traders’ shipments to Governments that face food shortages would be allowed if they are backed by proper LC.

Published on May 16, 2022
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