The wheat market in India remains under significant pressure despite measures aimed at stabilizing supply and prices. Several factors contribute to the current situation:
Open Market Sale Scheme (OMSS): The Food Corporation of India (FCI) has started selling wheat under the OMSS, with millers and processors showing strong demand. However, this has not been enough to bring prices down. The stock limits imposed on wheat and the recent reduction in the amount allowed for holding have added to the complexities in the market.
Low Wheat Stock in Central Pool: The stock of wheat in the central pool has fallen to its lowest level since 2007-08, which has contributed to the high prices in the domestic market. The government’s attempts to stabilize prices through various measures, including the OMSS, have not been fully successful.
Production Challenges: Wheat production in India has been below expectations for the past three years, affecting supply. Despite slightly higher sowing areas and favorable moisture levels in many regions, key wheat-producing states like Punjab, Haryana, and Rajasthan face uncertainty. Reduced sowing and rising temperatures have raised concerns about lower yields, especially in areas where sowing occurred later than the ideal time.
Stock and Distribution: As of December 1, 2024, the central pool holds 206 lakh tonnes of wheat. The Public Distribution System (PDS) requires 15 lakh tonnes of wheat per month, and new wheat arrivals are expected to ramp up only in April. Between December and March, 60 lakh tonnes of wheat will be distributed, and 25 lakh tonnes will be sold under the OMSS. The central pool needs to maintain a stock of 74.60 lakh tonnes by April 1, 2025.
This complex supply situation, combined with the uncertainty around the upcoming wheat harvest, continues to keep wheat prices high. The government is facing challenges in ensuring sufficient supply for the PDS while maintaining price stability in the domestic market.