India’s wheat procurement set to fall below estimate by 20%

By Reuters

India’s wheat procurement in 2023 could fall by a fifth from the initial estimate as government purchases have slowed down in the last few days after local prices jumped, government officials and traders told Reuters. Lower than expected purchases by the world’s second biggest wheat producer could limit New Delhi’s ability to intervene in the market to calm prices, which hit a record high earlier this year.

“Wheat procurement might end up this year somewhere around 27 million tonnes, and that is substantially higher than last year’s buying,” said a senior government official who did not wish to be named as he is not authorised to talk to media. India’s wheat procurement had more than halved in 2022 from the year before to 18.8 million tonnes.

India, also the world’s second-biggest consumer of wheat, banned wheat exports in May 2022 after a sharp, sudden rise in temperatures clipped output, even as export demand picked up to meet the global shortfall triggered by the Russia-Ukraine conflict.

The average wheat procurement in the past decade was 31.5 million tonnes. New Delhi was initially looking to buy 34.15 million tonnes of new-season wheat from farmers as production is estimated to jump to a record 112.2 million tonnes. “The government has so far procured 26.1 million tonnes of wheat and we’re still buying from farmers,” said another government official who did not wish to be named in line with official rules.

Procurement has slowed down in the last few days, but government agencies will keep the window open to buy from farmers until at least June 30, he said. Wheat prices in central India have risen 5% this month to 2,325 rupees per 100 kg against the government buying price of 2,125 rupees.

Wheat prices jumped to a record high in the second half of the last year after supplies dried up, said a New-Delhi based dealer with a global trade house. “This year many farmers have been holding back their produce anticipating prices would rally like the last year in the lean supply months,” he said.

This article has been republished from The Economic Times

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