The current wheat market in India is facing significant price hikes due to a combination of low supply and strong demand. Here's a breakdown of the situation:
Decreased Supply: The availability of wheat in major mandis (markets) across key producing states is continuously falling. Despite high prices and storage limits imposed by the government, supply remains constrained. This suggests that both farmers and traders have limited wheat stocks.
Delayed New Crop Arrivals: The arrival of the new wheat crop from major producing regions like Punjab and Haryana is not expected to gain momentum until April 2025. This delay exacerbates the supply shortage, as the market depends on fresh crops from these areas after the current stock is depleted.
Open Market Sale Scheme (OMSS): The government has reintroduced the OMSS from December 2024, with a monthly sale of 4-5 lakh tonnes of wheat. However, this is insufficient to meet the market demand. A total of 25 lakh tonnes have been allocated for this period (Dec 2024–Mar 2025), which is much less than the actual requirement. In addition, the Bharat Brand flour price has risen from Rs 275 to Rs 300 per 10 kg.
Government Limitations: The government offers wheat through weekly e-auctions, but due to limited wheat stock, the available quantity (one lakh tonne per auction) is almost entirely bought by millers. This low offer volume further highlights the shortage. The government cannot freely increase wheat offerings since it doesn't have a large enough surplus.
Uncertainty in Production: The sowing of wheat is complete, but there is still uncertainty about the crop's yield. Adverse weather conditions in February and March have historically caused damage to the crop, adding to the unpredictability of future wheat supplies.
In summary, unless there is an effective intervention by the central government, wheat prices are likely to remain high or even rise further between January and March 2025 due to tight supply conditions and strong market demand.