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Informist, Friday, May 23, 2025

 

By J. Navya Sruthi

 

MUMBAI – Even as the government has conceded that it is unlikely to meet its revised wheat procurement target of 33.3 million tonnes for the rabi marketing seasong 2025-26 (Apr-Mar), market participants see prices of the grain remaining largely stable. Prices may rise marginally after August, driven by festive-season demand, they said.

 

Food Secretary Sanjeev Chopra said on Tuesday that wheat procurement is expected to end at around 30.0 million tonnes in 2025-26, mainly due to weaker-than-expected government buying in key states such as Punjab and Uttar Pradesh. Market experts also broadly agree to this projection, estimating total procurement in the 30–31 million tonnes range. As of Wednesday, the government had procured nearly 29.7 million tonnes of wheat, which is about 89% of the revised target. This is still a robust 12% increase from last year's total procurement of 26.6 million tonnes for this period.

 

Despite falling short of the target, there is no alarm in the market. Thanks to ample output this year and healthy stock levels with the Food Corp. of India, wheat prices are expected to stay stable, experts said.

 

Prices had peaked in January to an all-time high of INR 3,300 per 100 kg due to tight supply. As of Friday, mill-quality wheat was quoted at INR 2,445 per 100 kg in Kota, Rajasthan, and INR 2,770 per 100 kg in Delhi.

 

"(Mandi) prices are up 9% year-on-year, of which 6% is due to the increase in the minimum support price," said agriculture analyst G.K. Sood. "The rest is due to low carry-over stocks from last year, which pushed demand from the industry. Going forward, we expect only a nominal price rise—not a substantial one."

 

Commodity expert G. Chandrashekhar agreed that wheat prices typically rise after August during the festive season, but said the situation this year is unlikely to spiral. "The market knows the government will intervene if prices shoot up. Currently, we're in a comfortable position with sufficient wheat availability," he said.

 

With an opening stock of 12 million tonnes of wheat and procurement of up to 30–31 million tonnes, the government will have enough to meet its obligations under the Pradhan Mantri Garib Kalyan Anna Yojana and still intervene in the market if necessary, Sood said. As of May 1, wheat stocks with the Food Corp. of India stood at a four-year high of 35.7 million tonnes, up 37% from a year ago.

 

In fact, some experts argue that the government may be procuring more than necessary. "Open-ended procurement is a faulty policy. The government should buy only what it needs, and let the market handle the rest," said Chandrashekhar.

 

EXPORT–IMPORT VIEW

With procurement already exceeding last year's levels, experts rule out any need for imports. However, speculation remains on whether the government may ease export restrictions on wheat products like semolina and atta.

 

"While the government may allow exports of wheat products, the ban on wheat grain exports is likely to continue," Chandrashekhar said. "We might see exports only if the FCI holds sufficient buffer for 2026–27."

 

Wheat exports were banned in May 2022 to ensure domestic availability and check any rise in prices. This was followed by a ban on wheat product exports in August that year. Although wheat imports are not banned, the current 40% import duty makes them unviable for traders.

 

Ajay Goyal, president of the Wheat Products Promotion Society, said any export-related decisions are typically taken after Jun. 15, once the government finalises overall crop estimates.

 

According to the second advance estimates, wheat production for 2024–25 is pegged at 115.4 million tonnes, up nearly 2% from last year. Private trade estimates range from 108-112 million tonnes, still higher than last year's output of 100–105 million tonnes.  End

 

Edited by Tanima Banerjee

 

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