Domestic wheat prices rising: Govt considering various measures to control.
Taking the 10% increase in wheat prices since June end seriously, the Centre is exploring various price-cutting measures, ranging from releasing grain under the open market sale scheme (OMSS) for user industries to slashing import duty to zero.
Food Ministry officials said in a meeting with representatives of the Roller Flour Mills Federation of India (RFMFI) that the Centre is actively monitoring the availability of wheat for consumers and user sectors, as well as keeping an eye on its price movements.
More than ₹300 per quintal
According to officials from the Food Ministry, the government ‘knows the instruments to limit price rise and will take a call if the problem of availability and price rise beyond a price range persists in the coming days.’
According to an RFMFI statement, Anjani Agarwal, the federation’s president, told Food Secretary Sudhanshu Pandey that wheat prices have risen by ₹300-350 per quintal in the last two weeks. ‘There is still doubt about price stabilisation,’ Agarwal told the Food Secretary, according to the release.
Millers were paying ₹2,400-2,500 per quintal in main growing areas but had to pay ₹2,750-2,850 in other places. Agarwal noted that the scenario is unusual because the next harvest is still eight months away, and that big traders and multinationals have cornered huge supplies.
Central stocks are plentiful
He also urged the Centre to take action to prevent the situation from spiralling out of control.
In response, Pandey told the group that the Centre will regulate pricing while also ensuring smooth availability, according to the statement. He informed the delegation that the Central pool now holds 26 million tonnes (mt) of wheat. The inventories exceeded the government’s requirement for foodgrain distribution under welfare programmes and buffer stocks.
RFMFI, for its part, encouraged the Centre to release a significant quantity of wheat under OMSS to stabilise the market and cut the wheat import duty from 40% to zero.
Both parties agreed that stockists, traders, and millers might voluntarily publish their usual wheat stocks. According to the statement, they agreed to revisit the situation in a fortnight. Demand for exports
According to Agmarket data, the net weighted average modal price (the rate at which most trades occur) of wheat has risen by 3% to ₹2,260 per quintal, up from ₹2,176 per quintal on July 25. The price was ₹2,050 at the end of June. National arrivals remain below 60,000 tonnes.
According to Consumer Affairs Ministry data, retail wheat prices have grown by 2.21% month on month to ₹30.47 per kg, while wheat flour (atta) prices have increased by 2.8% to ₹34.85 per kg.
Wheat prices have been higher than usual even before the foodgrain could be harvested this year due to export demand as worldwide supplies have been impacted by the Russian-Ukraine conflict. Both countries account for 30% of global trade.
Effects of the heatwave
Furthermore, the Food Corporation of India was able to buy only 18.9 million tonnes of wheat from farmers, a 57% decrease from the previous year, due to a heatwave that swept throughout the country in March-April.
All of this resulted in wheat exporters and traders stockpiling a massive amount of wheat, but the Centre’s embargo on cereal exports beginning May 13 took them off guard. However, they are retaining the equities in anticipation of additional price increases, according to trade sources.
Benchmark wheat futures on the Chicago Board of Trade have fallen 4.6% in the last month to $7.6 per bushel ($282.55 per tonne), owing primarily to an UN-sponsored agreement between Ukraine and Russia to ship wheat in the Black Sea region.
The International Grains Council reports that in the spot market, US Soft Red Winter wheat is quoted at $323 per tonne free-on-board and EU French Grade wheat is quoted at $350. The price of Argentine wheat is $410, whereas the price of US Hard Red Winter wheat is $368.