Wheat prices expected to remain strong due to reduced supply in mandis

05-Jul-2024 10:44 AM

New Delhi. Although the marketing season for wheat procurement at the government level ended on June 30, its arrival in major wholesale mandis and procurement centers had started decreasing much earlier.

The Union Agriculture Ministry has estimated the domestic production of wheat to increase from the record level of 1105.50 lakh tonnes in the 2022-23 season to an all-time high of 1129.20 lakh tonnes in the Rabi season of 2023-24,

but the data of arrivals in the mandis and government procurement does not seem to indicate that such a huge production of wheat has taken place in the country. Anyway, the industry trade sector has expressed the possibility of the actual production of wheat not exceeding 1040-1050 lakh tonnes.

The government has resorted to stock limits with the aim of increasing the supply and availability of wheat and curbing the rise in prices, but it is unlikely to have much impact.

There is limited stock of wheat with traders/stockists, millers processors and big chain retailers. Millers/processors are urging the government to start weekly auction of wheat under Open Market Sale Scheme (OMSS) as soon as possible and withdraw the 40 percent import duty on wheat so that they can get adequate stock of this grain, but the government is currently reluctant to accept both these demands.

There is a stock of more than 295 lakh tonnes of wheat in government warehouses when 184 lakh tonnes of wheat will be required for distribution in other welfare schemes including PDS and under special responsibility.

Even after this, a good stock of wheat will be available with it. But the government is still in a dilemma. It feels that the wheat supply season has not yet ended completely.

It will be good to start OMSS when the lean or off season of supply starts in October-November because there may be a huge demand for it from January to March.