Indian wheat prices jumped to a record high, despite a ban on exports, amid strong demand and dwindling supply from a crop damaged by heatwave. The price rally has reduced chances of India supplying substantial amounts of wheat under government-to-government deals with countries struggling to secure shipments amid the disruption of the war in Ukraine.
“Most of the farmers have sold their crop. Negligible supplies are coming up for sale even though demand is robust,” said Gopaldas Agarwal, a trader based at Indore in central India to the Economic Times.
Local wheat prices jumped to a record Rs 23,547 per tonne on Wednesday. That was up nearly 12 per cent from recent lows that followed the government’s surprise ban on exports on May 14. Wheat prices across many mandis witnessed a sharp spike on Wednesday to cross a record Rs 2,300 a quintal-mark, due to slower supplies and robust demand. The prices are now 14% above the minimum support price (MSP).
According to officials, wheat supplies to mandis have declined in the last one week as traders are holding on to stocks purchased from the farmers by paying a premium over the MSP in anticipation of export possibilities.
Supplies in grain markets were much lower this year than normal, showing that 2022 production had dropped far more than the government had estimated, said a Mumbai-based dealer with a global trading firm.
The government’s estimate of 106.41 million tonnes is nowhere close to reality. Supplies are suggesting production of around 95 million tonnes,” he said. India, the world’s second-biggest wheat producer, harvested 109.59 million tonnes in 2021. The government estimated less output this year because of a heatwave in March and April.
Lower supplies are also reflected in government wheat procurement, which so far this year is down 57 percent on the same period of 2021, at 18.8 million tonnes. India exported 3.5 million tonnes of wheat in the second quarter, mainly to Bangladesh, Nepal, Indonesia, the Philippines and Sri Lanka, up from 1.1 million tonnes a year earlier.