Indian wheat prices drop after Modi releases grain for flour millers

MUMBAI/NEW DELHI: Wheat prices in India, the world’s biggest consumer of the grain after China, have dropped nearly 13% from record highs since the government offer last week of 3 million tonnes to bulk consumers such as flour millers.

Prime Minister Narendra Modi’s government on Wednesday allowed flour millers to buy up to 3 million tonnes of wheat from state reserves. On Monday, wheat prices in New Delhi dropped to 28,290 rupees ($347.11) a tonne, down 13% from their record high hit last week because stocks are low. But domestic prices are still higher than the state-set support or guaranteed price of 21,250 rupees.

The price spike reflects a big drop last year in state purchases of wheat. Every year the government-backed Food Corporation of India (FCI) buys millions of tonnes of wheat at a fixed support price to build the reserves needed to run the world’s biggest food welfare programme. FCI also buys wheat from local farmers to build strategic reserves to deal with emergencies such as droughts.