Weekly Review-Wheat

13-Jan-2025 10:20 AM

Despite all the government efforts, the price of wheat is much higher than the MSP

Weekly Review: Wheat Prices and Market Trends

Despite government measures, wheat prices remain significantly higher than the Minimum Support Price (MSP), with various efforts to control the price rise showing limited success.

Government Measures:

The central government has been actively working to stabilize wheat prices and increase its availability:

  • Ban on Commercial Exports: The export of wheat and its products has been restricted since 2022 to ensure sufficient domestic supply.
  • Storage Limits: Limits on wheat storage have been enforced to curb hoarding and prevent artificial price hikes.
  • Wheat Flour Distribution: Wheat flour is being sold under the Bharat brand at a subsidized price of Rs 30 per kg.
  • Open Market Sale Scheme (OMSS): The government has been selling one lakh tonnes of wheat per week starting from December 2024 to augment domestic availability.
  • Food Grain Distribution: Under the National Food Security Act, free food grains are being provided to over 80 crore people.

Price Trends:

  • Delhi: On January 4, 2025, the price of wheat from Uttar Pradesh and Rajasthan surged to Rs 3340-3360 per quintal. However, by January 10, the price fell by Rs 80, settling at Rs 3260-3280 per quintal.
  • Madhya Pradesh: In Indore, wheat prices increased by Rs 70 to Rs 3000-3370 per quintal, while Ujjain saw a jump of Rs 150 to Rs 3100-3300 per quintal.
  • Rajasthan: Prices remained stable in most mandis, while Uttar Pradesh saw minor fluctuations (Rs 20 to Rs 40). In Shahjahanpur Mandi, wheat prices fell by Rs 14 to Rs 2951 per quintal.

Sowing and Production Outlook:

  • Sowing Status: The sowing of wheat for the 2024-25 Rabi season has been completed, with the area under wheat cultivation reported at 319 lakh hectares, an increase from last year.
  • Production Target: The government has set an ambitious production target of 1150 lakh tonnes for the 2024-25 Rabi season. However, the purchase target is only 300 lakh tonnes, indicating a possible surplus.

Arrival and Price Outlook:

  • New Harvest: The arrival of new wheat is expected to begin in March 2025, with significant arrivals from April.
  • Price Trend: Due to strong demand from millers and processors, and limited arrivals, it seems unlikely that wheat prices will drop significantly until the new crop enters the market.

Overall, despite government interventions, wheat prices remain high due to strong demand and limited supply, with the situation expected to stabilize only once the new harvest arrives in the markets.

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