India, the world’s second-biggest consumer of wheat, saw that its wheat exports surged since the conflict between Russia and Ukraine had hampered the global wheat trade through the Black Sea grain corridor. India also witnessed soaring prices of the staple in the domestic markets sparked by a lower crop yield as the output got affected by a sudden rise in temperatures during the wheat growing season.
The Indian Government is on the verge of offering 2-3 million tonnes of wheat from its dwindling state reserves to bulk consumers i.e. flour millers and biscuit makers in an attempt to cool down the soaring prices. ( As per government sources)
Fall Out Of Uncertainties
India restricted Wheat Exports in May to curb rising domestic prices but the domestic prices still remained significantly high. The high cost and the ban were linked to the Russia-Ukraine conflict and the lower output due to uncertain climatic conditions.
The high open market prices were above the Government procurement rates for the grain from the domestic farmers due to which the state purchases of wheat fell by 53% in the current year to stand at 18.8 million tonnes which led to the wheat reserves falling to a six-year low.
At the beginning of October, the state warehouses held a wheat stock of 22.7 million tonnes which is down from 46.9 million tonnes in the previous year. The Government announced that the stocks were sufficient to intervene in the market amid shortage and to curb the rising prices. As per a Government source, unloading wheat in the open market would be deemed necessary in order to control the prices till the Government could start its robust procurement efforts when it resumes purchasing in March and April.
India’s Wheat Requirements
The Indian Government procures wheat and rice from the farmers at state-set prices in order to run the world’s most extensive food welfare program for about 800 million residents out of the nation’s 1.4 billion population. In the fiscal year ending March’22, the falling wheat reserves (in contrast to overflowing granaries) and the rising prices of the staple still allowed the country to export a record 7.2 million tonnes of grain.
As Per the November’22 Report
In a report released in November’22, the Foreign Agricultural Service of the US Department of Agriculture forecast India’s 2022-23 marketing year wheat production at 99 million tonnes which is down in comparison to the 109.58 million tonnes in the previous year. It also predicted the staple exports to fall to 5.5 million tonnes for wheat and wheat products.
The year-ending stocks are expected at 9 million tonnes which would be less than half of the 19.5 million tonnes in 2021-22.
“Assuming some offtake of government-held wheat stocks for open market sales in the coming months, FAS New Delhi forecasts the marketing year 2022-23 ending stocks to decline to 9 million tonnes,” the report said. “This lower volume remains sufficiently above the government buffer stocks norm of 7.5 million tonnes.”
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