Wheat procurement set to cross 27 million tonnes

Wheat procurement by Government agencies has picked up pace and exceeded last year's levels on higher buying in states such as Haryana, Uttar Pradesh and Madhya Pradesh.

However, Punjab and Rajasthan saw a drop in procurement, largely due to lower market arrivals, official sources said.

Total procurement could exceed 27 million tonnes by early June as daily market arrivals across states are in the range of two lakh tonnes, official sources said.

“The absence of private players in the market is forcing the government agencies to purchase all the cereal that's coming into the markets,” they added.

Private players, amidst lack of export viability, have been selective in purchases as the quality of the grain this year has been impacted due to the unseasonal rains and hailstorm in the key producing states of Punjab, Haryana, Uttar Pradesh, Rajasthan and Madhya Pradesh.

The government expects the wheat output to be lower at 90.78 million tonnes (mt) against last year’s 95.85 mt.

In view of the crop damage, the government had relaxed the quality norms for purchases by state agencies.

Sources said the storage position of the procured wheat has been comfortable till now.

However, storage of the quality affected wheat could pose a challenge for the government agencies.

The Government could take a call on disposing the quality affected wheat once the procurement is over by early June.

Meanwhile, the weakening of rupee in recent past has forced the millers to adopt a wait-and-watch approach on contracting further imports. The rupee has weakened by about 3 per cent against the US dollar since early April till now.

The rains that affected the quality of wheat have forced the flour millers to purchase wheat from Australia. “We are waiting for the rupee to stabilise. Also we are keeping a close watch on the international prices to decide on our further purchases,” a miller said.

It is estimated that millers have so far, contracted anywhere between 3 and 5 lakh tonnes of Australian wheat, which has a high protein content. The high protein wheat is used to blend with the local wheat to produce maida that’s used in bakery products and the growing chain of quick service restaurants.

Indian millers are also considering importing wheat from countries such as Russia and Ukraine, but are hesitant to enter into any contracts due to the strict phytosanitary norms that are in place.

Unless the government relaxes the phytosanitary norms, as they had done in 2005-06, it may be difficult to import from Russia, which has recently withdrawn the export tax on its shipments, sources said.

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