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Informist, Tuesday, Apr. 22, 2025

 

By J. Navya Sruthi

 

MUMBAI – Wheat traders in Rajasthan are facing a crunch of storage space, thanks to huge stockpiles of rice and soybean from the kharif season, traders and industry sources say. The problem is likely to continue for a while, they say.

 

Above-normal rainfall in the southwest monsoon had lifted kharif paddy acreage in India, leading to record production of rice. Rice exports were also restricted then, which led to higher stocks in the domestic market. While the government did away with curbs on exports of all rice varieties in March, the supply glut persists.

 

According to the government's second advance estimate, the country's rice output in the kharif season is pegged at 120.7 million tonnes compared to 111.5 million tonnes the previous year, and the rabi crop is seen at 15.8 million tonnes, compared to 12.4 million tonnes.

 

The government's warehouses are brimming over with rice. Stocks of the commodity in the central pool were up 26.5% on year at 38.2 million tonnes as of Apr. 1, according to data from Food Corp. of India. The stocks were up nearly 4% from 36.8 million tonnes a month ago. The rice stocks are far above the buffer norm of about 13.6 million tonnes – operational stock of 11.58 million tonnes and strategic reserve of 2.00 million tonnes.

 

The case is similar for soyabean as well. The government has pegged soybean output in 2024-25 (Jul-Jun) at 15.1 million tonnes, higher than 13.1 million tonnes the previous year.   

 

For traders whose warehouses are nearly full, heavy wheat arrivals in recent days have posed a problem. 

 

"There are warehousing and logistical issues in Rajasthan, especially in wheat-growing districts like Kota, Baran, Bundi, and others... also, higher stocks of paddy have led to this warehousing issue as rice exports were banned, because of which the stock has remained in mandis (markets)," said Ajay Goyal, chairman of the Wheat Products Promotion Society.

 

Lower prices of rice and soybean in the market have only discouraged traders from selling these commodities, compounding the challenge, said Aniket Mehta, a trader in Kota, a major grains mandi in the state.

 

Wheat production in Rajasthan is seen 13% higher on year at 10.9 million tonnes. The higher supply of late, coupled with storage space constraints, have weighed on prices. On Friday, prices of mill-quality wheat were down by INR 15 at INR 2,380 per 100 kg, Mehta said. On Monday, prices rose by INR 2,410-INR 2,415 per 100 kg, as arrivals fell by 10,000 bags to 90,000 bags (1 bag = 50 kg). 

 

Wheat arrivals are expected to increase on the back of record high production. Goyal expects total wheat production in India to be 5-7% higher than last year, while Mehta said the output could be 10% higher. In the second advance estimates, released on Mar. 10, the government pegged India's wheat output in 2024-25 (Jul-Jun) at 115.4 million tonnes, higher than 113.3 million tonnes estimated for 2023-24. 

 

Meanwhile, wheat stocks in the Centre's pool were at a three-year high as of Apr. 1. Stocks with FCI were at 11.8 million tonnes, up from 7.5 million tonnes last year. This is 4.3 million tonnes more than the buffer norm of 7.5 million tonnes for Apr-Jun.

 

In the marketing year that began on Apr. 1, the nodal agency purchased 674,501 tonnes of wheat from farmers in Rajasthan till Sunday at the minimum support price of INR 2,425 per 100 kg, with a bonus of INR 150. During the corresponding period last year, the government had procured only 155,356 tonnes, according to data provided by FCI. The all-India overall procurement by FCI was at 12.7 million tonnes, higher than 7.48 million tonnes a year ago.  End

 

Edited by Avishek Dutta

 

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