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Informist, Friday, Feb. 6, 2026

 

By Pallavi Singhal and Abhijit Doshi

 

NEW DELHI/MUMBAI – The Centre's decision to lift wheat stockholding limits after more than three years has been widely read by the trade as a familiar, cyclical policy move rather than a structural shift in grain market management, with attention now turning to whether the government will take the next and more consequential step of allowing wheat exports, which have been disallowed since May 2022. Traders said the government may consider opening wheat exports, as closing stocks are widely seen above 20 million tonnes.

 

Several market participants said the withdrawal of stock limits fits into a well-worn annual pattern of intervention and rollback, where controls are relaxed once supplies improve, only to be reconsidered in the following season if prices rise or availability tightens.

 

"This is the same playbook every year," said the head of commodities trading and risk management at a large private-sector conglomerate, requesting anonymity. "Once harvest happens, stock limits have no meaning."

 

According to him, the real signal the market is waiting for is on exports rather than stockholding rules. "More important would be to see if exports happen, and I don't see them happening easily because of the possibility of El Nino in the next monsoon season," he said. He added that exports and stock limits are mutually exclusive in practice. "For exports to happen, no stock limit is a basic condition. If stock limits are there, nobody can export, because vessels are at least 30,000–50,000 tonnes."

 

He also pointed to the government's inventory position as a key consideration. "Government closing stocks as on Apr. 1 are likely to be above 20 million metric tonnes, even though official numbers are not out yet," he said. 

 

If closing stocks are comfortable and above 20 million tonnes, the government is likely to have enough grain to meet public distribution system needs, run open market sales if prices spike, and thus may be open to the idea of the grain exports. The trade estimates the government needs about 18.4 million tonnes for public distribution under the free ration scheme

 

On Thursday, the Ministry of Consumer Affairs, Food and Public Distribution scrapped the wheat stock limit order with immediate effect, following improved market availability of the grain ahead of the festival season. The restrictions had earlier been imposed till Mar. 31. However, the ministry said all wheat stocking entities will continue to declare their stock positions every Friday on the food stock portal.

 

As per declarations available on the Department of Food and Public Distribution's portal for 2025–26, wheat stocks held by private entities have risen sharply to 8.1 million tonnes, compared with about 3 million tonnes a year ago, signalling comfortable domestic supply.

 

Wholesale prices also point to surplus conditions. Wheat prices have fallen to INR 2,852.3 per 100 kg from INR 2,970.1 a year ago, indicating subdued demand. The Food Corp. of India's wheat auctions have also not seen strong participation from the market, reinforcing the perception of ample availability.

 

Ajay Goyal, chairman of the Wheat Products Promotion Society and the managing director of Shivaji Roller Flour Mills, said stock limits should never have been imposed and that their withdrawal would not alter current market dynamics. "The stock limits should not have existed in the first place, and the withdrawal will have no impact on the current market situation," he said.

 

Goyal said there is a good possibility that the government allows wheat exports next season. "Opening stocks are seen at around 21 million tonnes. Despite the possibility of El Nino, I see the government at least considering and reviewing the opening of wheat exports," he said.

 

He does not expect a return to stockholding caps. "I doubt the government will bring back stock limits, but weekly or fortnightly stock reporting may continue," Goyal said.

 

Another senior executive at a global agribusiness firm said the government appears comfortable on both stocks and crop prospects. "Opening stocks would most likely be more than 22 million metric tonnes," he said, declining to be named. "They are expecting a better crop in the coming season based on current sowing, which is about 2% higher."

 

He also cited the limited opening of wheat product exports as an indication of calibrated easing. "The government has already allowed exports of wheat products amounting to 500,000 metric tonnes," he said. "With this withdrawal of stock limits, reimposition seems unlikely as of now."

 

However, he flagged weather as the key risk. "If we see any impact of weather on the current crop--which will become clearer from March--then the government might bring stock limits back," he said. Stock limits may not return because government stocks are high and prices are low, he said.

 

A trader with a multinational commodity trading firm struck a more cautious note, describing policymaking as difficult to predict. "The government is behaving very unpredictably, so it's hard to guess," he said. "Logically, stock limits are not required."

 

He said the government's focus may now shift towards farm-gate prices rather than price control. "This year, private trade participation will be watched closely. If markets operate well below the minimum support price, there will be pressure on the government to ensure MSP realisation for farmers," he said. "Policy decisions from here could be more about creating remunerative prices."

 

He added that climate risk will loom large over any export decision. "El Nio will definitely be on the government's radar before taking any call on fully opening wheat and wheat product exports," he said, estimating government closing stocks in the range of 22–23 million metric tonnes.

 

Notably, the lifting of stock limits comes in contrast to last year's move. On Feb. 20 last year, the Centre further tightened wheat stock limits, reducing permissible holdings for traders, wholesalers and retailers.  

 

The conundrum on wheat exports come amid a higher wheat acreage, up by almost 2%, yet uncertainity on yeild outcomes due to weather stress. The India Meteorological Department has warned of drier-than-normal conditions in the coming months, which are critical for wheat harvesting. Several global agencies have also forecast the development of El Nio conditions during the southwest monsoon, which may cloud the next season's output as El Nino often results in below-normal rainfall and lower agricultural output in India.

 

Market participants said the government may wait for the first advance estimate of rabi crop production before deciding on exports. The estimate is expected sometime in March; last year, it was released on Mar. 10.

 

For the wheat trade, a nod to exports would be welcomed, but participants said the factors that will matter most are the conditions attached to any permission, overseas prices, and domestic availability. On Jan. 17, the government allowed exports of 500,000 metric tonnes of wheat products, but the conditions attached were so restrictive that very little export activity actually materialised.

 

For now, the lifting of stock limits has eased one layer of control, but the wheat market remains firmly in a wait-and-watch mode--comfortable on supply, wary of weather, and still waiting for the policy signal that will help their realisations.  End

 

Edited by Akul Nishant Akhoury

 

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