The government’s delay in releasing wheat into the open market has pushed commodity prices to new record highs. Government circles had earlier said that the government would release goods from its godowns to keep prices under control in the open market. Government procurement was also badly hit due to a lower-than-expected crop last season. Due to which the government had banned the export of wheat from the country in May 2022.
India is the second largest producer of wheat in the world after America. It is also the world’s largest user. In March 2022, a heat shock had a major impact on the wheat yield in the rabi crop season. This resulted in lower production and procurement of wheat by FCI at the support price for the Central Distribution System was seen at multi-year low. According to traders, amid the ban on wheat exports from the country, the record price of wheat is indicating that the decline in production has been much bigger than expected. According to government estimates, production in the 2022 rapeseed marketing season has come down to 106.84 million tonnes from the government’s initial target of 109.59 million tonnes. According to a prominent trader in Indore, farmers have already sold their crops. Traders do not have stock. Whereas the demand is being seen very high. The prices are currently rising due to the high gap between demand and supply. He adds that the prices will continue to decline till the new season supplies start. Wheat crop is sown in October-December and harvested in March-April.
The benchmark price in Indore market increased to Rs. 29,375 ($361.09) per tonne. Which shows an increase of 7 percent in the month while 37 percent in the 2022 season. Wheat price in New Delhi increased by two percent on Monday to Rs. reached 31,508. A dealer of a global trading company says that if the government does not release the quantity in the next 15 days, the price of wheat is likely to increase by 5-6 per cent. A Delhi-based trader said that even bulk consumers like wheat flour millers are struggling due to short supply and high prices.