Fluctuations in Wheat Prices in India: Bumper Crop Expected, But Stock Remains Low
24-Feb-2025 03:23 PM
Fluctuations in Wheat Prices in India: Bumper Crop Expected, But Stock Remains Low
★ Wheat Prices Show Volatility in Delhi and Madhya Pradesh
Wheat prices in India have remained high, leading to increased sowing this year, surpassing last year’s levels and the 10-year average.
★ On Saturday, February 22, wheat prices in Delhi were recorded at Rs. 3,260-3,280 per quintal, but today, the market opened with a drop of Rs. 30, settling at Rs. 3,225-3,250 per quintal. However, within a few hours, prices increased by Rs. 20, indicating tight supply conditions in the market.
★ In Madhya Pradesh, new crop arrivals have begun. In Vidisha Mandi, wheat from the new crop was priced at Rs. 3,150 per quintal, with arrivals of 50-60 bags.
Favorable Weather Despite High Temperatures
★ Although some areas have experienced high temperatures, the current day-night temperature variation is favorable for wheat crops. According to IGrain India, if weather conditions remain stable, India’s wheat production could reach 110 million metric tons this year.
Stock Levels Improve Slightly but Still Low
★ As of February 2025, India’s government wheat stock stood at 16.174 million tons, up by 2.908 MMT from 13.266 MMT in February 2024. However, data shows a consistent decline in wheat stocks since 2021:
Government Wheat Stock Levels (in million Tons) on start of month
Feb 2021– 31.83
Feb 2022– 28.273
Feb 2023– 15.444
Feb 2024– 13.266
Jan 2025 – 18.4.11
Feb 2025 – 16.174
★ Although stock levels have slightly improved in 2025, they remain significantly lower than in 2021 and 2022.
Heavy Sales Under OMSS, Wheat Prices Remain High
★ Over 98% of wheat from the last 13 OMSS tenders has been sold, with recent tenders recording all-time high prices. Limited stock availability is preventing a major price drop.
MSP Bonus Expected to Keep Prices High
★ The governments of Rajasthan and Madhya Pradesh have announced a Rs. 150 per quintal bonus over the Minimum Support Price (MSP) of Rs. 2,245 per quintal in manifesto, keeping wheat prices higher in these states. Additionally, strong demand from Uttar Pradesh and other northern states is expected.
Stock Limit Adjustments Fail to Lower Prices
★ Despite multiple changes in wheat stock limits, price reductions have been minimal:
- Stockist limit reduced from 1,000 tons to 250 tons.
- Retailers and large chain stores can now hold only 4 tons, down from 5 tons.
- Processors are allowed to stock 50% of their Monthly Installed Capacity (MIC) until April 2025.
★ Traders must reduce excess stock within 15 days and the revised stock limit order will remain effective until March 31, 2025. However, despite these restrictions, prices continue to rise, indicating tight market availability.
Private Buyers May Impact Government Procurement
★ If wheat prices remain above MSP during peak arrivals in April-May, government procurement may decline further, as seen in the last three seasons. Traders and millers, with depleted inventories, are expected to buy aggressively when the new crop enters the market.
Import Only Solution for Price Control, But Farmers May Anger
★ Experts suggest that importing wheat is the only viable solution to control prices. However, this could lead to farmer anger, as increased imports may pressure domestic wheat prices.
★ The Roller Flour Millers Federation of India will host the "Future of Milling - Vision 2030 & Beyond" conference at JW Marriott, Goa, on March 3-4, 2025, where the wheat market situation will be discussed in detail.
★ i-Grain India can be contacted for participation details.