MUMBAI: Indian wheat stocks held in government warehouses for December fell to the lowest in six years, government data showed on Tuesday, as prices jumped to a record high on rising demand and falling inventories.
Lower state reserves could hobble the government’s efforts to release stocks to cool wheat prices, something it does regularly for bulk buyers such as flour and biscuit makers.
Wheat reserves in state stores totalled 19 million tonnes at the start of this month, down from 37.85 million tonnes on Dec. 1, 2021. The current stocks for December are at the lowest since 2016, when inventories had fallen to 16.5 million tonnes because of back-to-back droughts in 2014 and 2015 that curtailed wheat output.
“The new crop supplies would start only after four months. The government’s task of calm prices is becoming more difficult every month,” said a Mumbai-based dealer with a global trade house. “It can’t release more than 2 million tonnes in a month to bring down prices. The market needs much more as farmers supplies have nearly stopped and traders are slowly releasing stocks,” he said.
The government stockpile depleted by around 2 million tonnes in November, according to data compiled by the Food Corporation of India. Wheat prices have surged in India despite the world’s second-biggest producer of the grain implementing a ban on exports in May as it was stung by a sudden drop in crop yields.
Local wheat prices have jumped nearly 28% since the May ban on exports and ruling at 26,785 rupees a tonne on Tuesday. Wheat production in the new season would rise to normal levels but prices would remain elevated until the new season supplies gain momentum from April, said a New Delhi-based trader.
Indian farmers have planted wheat on 25.6 million hectares since Oct. 1, when the current sowing season began, up 25.4% from a year ago.
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