Indian wheat prices surge as farmers hold back produce

Indian wheat prices have risen by at least $100 a quintal in the past week as farmers have begun to curb their production in hopes of higher prices.

With prices firmly controlled above the minimum support price (MSP) of $2,125 a quintal and private traders buying directly from them, farmers are hoping to take advantage of the current situation.

The situation has shifted focus to wheat production this year, which traders and experts said will likely be lower than the Ministry of Agriculture’s estimate of 112.18 million tonnes.

FCI does not offer

“Farmers are not bringing their produce to the markets. Last year, they got as much as INR 3,000 per quintal and they hope to get similar prices this year too,” said Pramod Kumar, President of Roller Floor Mills Association of India.

There is a good demand for wheat from the trade. BK Singh, Chairman and Managing Director of BKC Aggregator Pvt Ltd, which operates the ‘Fasal Salah’ app, said farmers are smart and don’t offer their produce to Food Corporation of India (FCI) in MSP for central mall shares. .

This was particularly true in Uttar Pradesh where farmers tended to sell to private traders rather than offer their produce to the FCI.

current prices

“I am forbidding the wheat that I have produced this year. The crop has been affected due to weather-related problems, but I am not selling in hopes of getting a better price,” said Jaikshore Singh, a farmer in Chandauli district in Uttar Pradesh.

“Farmers are looking at the gains they made last year. They expect prices to rise further,” said MK Dattaraj, managing director of Mills Krishna Group.

Currently, the weighted average price of wheat is $2,219 per quintal. However, in the Narela Agricultural Produce Marketing Commission (APMC) yard in Delhi, their typical price (the rate at which most trade takes place) is $2,350.

“We get about INR 2,400 at our doorstep from private traders for our wheat,” Singh said. In Uttar Pradesh Hardoi APMC, wheat is priced at $2,225.

FCI Purchases

“The government was lucky to get more than 25 million tonnes of wheat this year,” said Adi Narayan Gupta, a New Delhi-based miller.

Food Corporation of India (FCI), which is buying wheat for central pool stocks, has managed to purchase about 26.5 metric tons so far. “FCI may end up acquiring 27 million tons of wheat stocks for the central complex,” said Gupta.

Wheat prices are increasing as the market sees production this year may be less than 105 metric tons. The United States Department of Agriculture has estimated the wheat yield in India at 104 metric tons against 109.59 metric tons in 2022. A survey conducted by the Rolling Flour Mills Association put the production at 104.24 metric tons.

said Prasanna Rao, Co-Founder and CEO of

Mills not stocked yet

“The production of wheat this year is lower than last year,” said BK Singh. An Indian chief of a multinational exporting company has said that production may be less than 100 metric tons and the country may have to look at imports.

“There is nothing to worry about on the supply front; we have global parity of $280 a ton,” Kumar said.

However, some flour mills say they haven’t stocked up some say they usually buy stock now, but the price hike has put them in the right place.

“It’s good that the Ministry of Food said it will study the Open Market Sale (OMSS) plan for wheat in July,” said one of the millers.

Export ban

Earlier this year, when wheat prices rose above 33 rupees per kg, the center came up with OMSS to bring down grain prices. OMSS was discontinued after March as the new crop had reached the markets by then and the center did not want to deny farmers at least MSP.

India’s wheat crop was affected by weather-related events – heat wave and unseasonal rains – in 2022 and 2023. In addition, wheat exports of more than 7 tonnes last year led to tighter supplies.

The center had to ban wheat exports to keep prices under control. The ban is expected to continue this year as well.