The prices of wheat in India have surged to a six-month high due to limited supplies and high demand ahead of the festival season, Reuters reported on Tuesday citing traders. The surge in prices may push the already high inflation, which the central government and RBI have been trying to contain for over a year. Curbing inflation will also be the focus of the Centre, considering assembly elections in crucial states like Rajasthan, Madhya Pradesh, Chhattisgarh, and Telangana.
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A New Delhi-based trader told the international news agency that in all key producing states, farmer supplies have nearly come to a halt. "Flour mills are struggling to obtain sufficient supplies in the market."
Wheat prices in Indore, the report said, rose by 1.5 per cent on Tuesday to Rs 25,446 per metric ton, the highest since February 10. Prices have surged by nearly 18 per cent over the past four months.
A Mumbai-based dealer said the government should release stocks from its warehouses into the open market to avoid potential shortages during the festive season.
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As of August 1, wheat stocks in government warehouses stood at 28.3 million metric tons, an increase from the 26.6 million metric tons recorded a year earlier. "Imports are necessary to lower prices. The government cannot increase supplies without imports," the dealer said.
Last week, Food Secretary Sanjeev Chopra said that the government was considering a proposal to cut or abolish a 40 per cent import tax on wheat. He also said that there was no plan to import wheat from Russia or engage in a government-to-government deal.
In recent months, wheat prices in the national capital have surged 12 per cent, reaching a six-month high of Rs 25,174 per metric ton. This price hike is attributed to erratic weather conditions like unseasonal rain and heatwave that adversely affected production. The wheat production was higher in 2023 compared to last year but was lower than the estimates.
The central government in June imposed a limit on the amount of wheat stocks traders can hold. It also said that 15 lakh metric tonnes of wheat would be offloaded in the first phase from central pool stock to flour mills, private traders, and bulk buyers to control retail prices.
The Ministry of Consumer Affairs in June said that in order to manage overall food security and to prevent hoarding and unscrupulous speculation, the government had decided to impose stock limits on the wheat.
Wheat output rose to a record 112.74 million metric tons in 2023, up from 107.7 million metric tons a year earlier, according to the Ministry of Agriculture & Farmers Welfare. The country consumes around 108 million metric tons of wheat annually. However, a leading trade body told the news agency that the country's wheat harvest in 2023 was at least 10 per cent lower than the farm ministry's estimate.
(With inputs from Reuters)