Wheat prices start falling after govt ban

The government in a sudden move on Friday imposed a ban on wheat export with immediate effect to manage the overall food security of the country and to curb the multi-year high inflation.

Wheat prices fell across the country on Saturday and more correction is expected in the coming days.

Wheat prices were quoted at around Rs 2,075/2,300 per quintal, down by Rs 80-100 from Friday in Kota mandi of Rajasthan.

In the Narela market of Delhi, wheat was quoted at Rs 2,200-2,220 a quintal as against 2,300-2,330 a day earlier.

Also Read | India says wheat export ban to help neighbours, other vulnerable nations

Wheat and flour prices were on the rise since the commencement of new crop supplies, mainly due to increased exporters buying and projection of lower production of grain due to hot weather conditions in March which hit yield.

There is a sudden spike in the global prices of wheat arising out of many factors, as a result of which the food security of India, neighbouring and other vulnerable countries are at risk, said the notification issued by the Director-General of Foreign Trade (DGFT).

India has emerged as a major supplier of wheat after prices surged in the global markets due to the disruption of supplies from Russia and Ukraine due to war. These two countries contribute nearly 30% of the global export trade.

Also read: Wheat procurement extended till May 31 in 6 states

As supplies from these two countries were affected, global wheat prices rose to a multi-year high in Chicago Board of Trade (CBoT). On Friday, wheat traded at around $11.77 a bushel on CBoT, up sharply from $7.61 a bushel in early February.

Indian exporters received good orders and the country shipped nearly 70 lakh tons of wheat in the financial year 2021-22 even as the government was expected to ship around 100 lakh ton of wheat this fiscal on the basis of the projection of record wheat output at 1,113 lakh ton during 2021-22 (July-June).

In the second advance estimates, the government revised the estimates downward to 1,050 lakh tons as higher than normal temperatures in mid-March and April impacted the yield.

However, traders are projecting a much lower wheat production this year.

Also Read | World’s food problems piling up as India restricts wheat exports

As per trade sources, export contracts of 45 lakh ton had been finalised this fiscal and nearly 15 lakh tons has been shipped in April while data for May is not available.

Government buying

Meantime, government purchase was hit badly as market prices are ruling much higher than the minimum support price (MSP) at Rs 2,015 a quintal. Farmers sold their produce to traders or exporters and government agencies could purchase around 178 lakh ton of grain so far in the current marketing season 2022-23 (April-March) as against the revised procurement target at 195 lakh ton.

Earlier, the government set a purchase target of 444 lakh ton. Last year, the procurement was 390 lakh ton. As on May 1, a wheat stock with Food Corporation of India (FCI) stood at 303.46 lakh ton, down 42% from a year ago when the stock was 525.65 lakh ton.

(The writer is a senior journalist based in New Delhi)