Fears of decline in global wheat production, Russia-Ukraine war and heat wave also affected

Concerns are now being raised about wheat production around the world. Wheat production has reduced due to unbearable heat in countries including India. On the other hand, due to the Russo-Ukraine war, wheat prices are rising sharply. As a result, the prices of wheat for daily consumption have started rising. This item also includes bread, […]
 


Fears of decline in global wheat production, Russia-Ukraine war and heat wave also affected

Concerns are now being raised about wheat production around the world. Wheat production has reduced due to unbearable heat in countries including India. On the other hand, due to the Russo-Ukraine war, wheat prices are rising sharply. As a result, the prices of wheat for daily consumption have started rising. This item also includes bread, biscuits, bread. According to an estimate, 774.8 million tonnes of wheat is expected to be produced in 2022-23. China is the major producer of wheat after India. Wheat production in China is expected to decline by 1.4 per cent. In Canada too, there is a fear of a fall in wheat production due to the heat. Russia estimates it will produce 80 million tons instead of its 87 million tons.

Late on Friday, the Indian government banned the export of wheat from the country. Due to this, not only did the health of commodity exporters deteriorate on Saturday morning, but thousands of traders were also upset. This is because from the beginning of the new marketing season, traders in the markets of the country have started buying wheat on a large scale. India emerged as a major supplier to global buyers after supply disruptions in the Black Sea following the Russo-Ukraine war, where the government took a tough public interest and banned wheat exports.

The new rabi marketing was looking at the prospect of record wheat exports from the country. It was estimated that more than 10 million tonnes of wheat will be exported this season as against 70 lakh tonnes last season. Wheat prices rose by more than 20 per cent in the wake of the Russo-Ukraine war, affecting supplies in the global market. Due to which all eyes were fixed on India, the world’s second largest wheat producer. Despite the fact that wheat, the main rabi crop, was sown on less than 4 lakh hectares last season, the government was projecting the production to cross 110 million tonnes due to climate change. However, the sudden heat wave at harvest time in March had a severe impact on productivity and as per the Revised Estimates the crop is expected to be lower than the previous season. Sources said the crop would be 10 per cent lower than the government’s earlier estimate of 113.2 million tonnes.

The government has banned the export of wheat saying that it will still allow export of wheat where letters of credit have already been issued. In view of the food security requirements, the supply will also be provided to the countries which have requested for wheat.

Indian wheat prices hit record high

Indian wheat prices have recently hit record highs due to high global demand. The price of wheat in the local spot market is Rs. 25 thousand per ton was quoted. which is Rs. 20,150 per tonne as compared to the MSP, indicating a premium of 25 per cent. In dollar terms, it was seen at 20 320 per tonne. The rise in wheat prices is being attributed to the increase in fuel and packaging prices. In addition, labor costs have risen sharply. With the rise in wheat prices, wheat flour companies saw a significant increase in prices. Which had a direct impact on retail inflation. Government officials say that while edible oil prices are skyrocketing, the government cannot afford to let staple food prices like wheat go out of control. India is not self-sufficient in edible oil but self-sufficient in wheat and hence it is possible for the government to keep wheat prices under control.

Global wheat prices to rise further

Traders believe that the Indian government’s ban on wheat exports will lead to a rise in wheat prices in the global market. In April, India exported 1.4 million tonnes of wheat, while in May 1.5 million tonnes of wheat was exported. Presently there is no major wheat supplier in the world except India and hence global wheat prices may see an increase. According to traders, India may not be the top exporter of wheat in the world, but as soon as it imposes restrictions on wheat exports, tight global supplies will tighten. This could come as a major blow to poor consumers in Asia as well as Africa. After the war broke out between Russia and Ukraine on 24 February, the demand for wheat exports from India increased and the country was expected to export at least 10 million tonnes of wheat. According to a Mumbai-based export dealer, the government’s ban on export of wheat is coming sooner than expected. Trade circles were looking at the possibility of export ban after two-three months. However, given the recent retail inflation data for April, the government is believed to have decided to impose restrictions on exports of the country’s most important staple food.

Crop lower than initial estimate

The government had estimated the country’s wheat production at 11.35 million tonnes in the Rabi marketing year 2022-23. However, looking at the actual revenue during the marketing season, the new crop is estimated to be around 105 million tonnes. In this way, 85 lakh tonnes less wheat will be harvested than the initial estimate. which is slightly lower than the expected export estimates. In such a situation, free export of wheat can be dangerous for the domestic supply. According to the Union Commerce Minister, there has been no dramatic fall in wheat production. He said that the government has decided to divert the exports to needy countries to export wheat. He said that the scorching heat has caused extensive damage to wheat production in Punjab, Haryana, Uttar Pradesh and Madhya Pradesh. As a result, government agencies are failing to procure targeted wheat.

The government’s procurement of wheat to the poor under the public distribution system has fallen far short of its target. Only 19 million tonnes of wheat has been procured in the current season against 4.35 million tonnes in 2021-22. Which shows a decline of more than 50 percent in government procurement. One of the reasons for the decline in wheat procurement is the continuing sale of the crop from farmers to private traders. The market prices of wheat are running above the minimum support price fixed by the government and hence wheat growers do not see any need to sell their produce to government bodies like the Food Corporation of India this season.