Mandi wheat prices dominate up to 19% above MSP, despite export ban

By Sandip Das and Nayan Dave

Wheat prices in major mandis across the country are about 14% to 19% above the minimum support price (MSP) of Rs 2,015 per quintal for the current rabi season (2022-23), as traders hold on to inventory in anticipation of further price increases ahead of the holiday season, industry sources told FE.

Trader action mitigated the impact of the wheat export ban, imposed on May 13 to keep domestic supplies stable, amid falling production. In fact, according to wholesale price inflation data released on Tuesday, pressure on wheat prices jumped to 13.61% in July from 10.34% the previous month.

Also read: WPI inflation eases to 5-month low of 13.93pc in July; food prices are falling

Wheat prices have reached Rs 2,400 per quintal in Sehore, one of the largest mandis in Madhya Pradesh, while these reign around Rs 2,300 per quintal in Chittorgarh mandi, Rajasthan. Arrivals, meanwhile, have been quite slow for the past few weeks.

In Delhi, millers buy wheat at around Rs 2,350-2,400 per quintal.

The price spike comes despite the government’s imposition of wheat export restrictions in mid-May and recently imposed export restrictions on all types of wheat-based flour, including semolina ( rava or suji flour) and refined flour (maida).

“Most of the traders had bought wheat paying around Rs 200-250 per quintal as a premium to the farmers MSP during the buying season in April in anticipation of the surge in exports and they have already incurred storage costs and interest on the bank loan granted,” said Mukesh Khatod, a trader from Chittorgarh, Rajasthan.

According to Khatod, once mandi prices reach Rs 2,500 per quintal, traders would start selling in the market. Since the government banned the export of wheat in May, traders have been waiting for prices to pick up before releasing their stock onto the market.

Gagan Gupta, a trader from Sehore, said prices are expected to rise further due to the upcoming demand as the festive season approaches.

“Wheat prices are expected to remain higher until the fresh wheat harvest arrives in April as many traders, who are still holding stocks, have incurred purchase costs of wheat mainly from Madhya Pradesh at Rs 2,500 quintal,” Ramesh Sharaf, Chairman, Gujarat Flour Millers Association, said.

This year, the Food Corporation of India (FCI) will not undertake the open market sale of wheat from excess stocks, after many years of low stocks and a sharp drop in purchases this season.

In FY22, the CFI had sold over 7 million tonnes (mt) of wheat on the open market for which the price was set approximately 8% above the MSP in the year the wheat was purchased. grain.

Meanwhile, Haryana State Cooperative Supply and Marketing Federation (Hafed) decided on Tuesday to sell more than 0.1 tonnes of wheat in the open market. This comes after the milling industry recently met with the Food Secretary and informed him of the dwindling availability of wheat in the market.

Also read: Claims under crop insurance scheme plunge

Hafed had purchased 0.2 tonnes of wheat at prices above MSP prices for exports.

During the rabi marketing year (April-June) for 2022-23, wheat purchases by the CFI fell by more than 56.6% to 18.7 tons compared to 43.3 tons purchased from farmers the last year. The drop in purchases was attributed to the drop in production.

As of August 1, central pool wheat stocks stood at 26.6 MT against the buffer standard of 20.5 MT (as of October 1), the lowest since 2008.

According to data from the Ministry of Agriculture, wheat production in the 2021-22 crop year (July-June) decreased by around 3% year on year to 106 million tonnes (mt) from 109 mt, the trade estimate suggests wheat is out around 98-99 mt. The US Department of Agriculture’s Foreign Agricultural Service estimated India’s wheat production at 99 tons.

In the current fiscal year, India exported about 3.5 tons of wheat. India shipped a record 7 tonnes of wheat worth $2 billion in FY22, compared to just 2.1 tonnes worth $0.55 billion in FY22. exercise 21.

Currently, exports are undertaken to meet the real need for food security through government-to-government (G2G) channels.

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