India To Offer 2 Mln Tonnes More Wheat To Cool Prices

India To Offer 2 Mln Tonnes More Wheat To Cool Prices

In May 2022, India, which is also the world’s second-largest consumer of wheat, outlawed exports after a sharp and sudden rise in temperatures cut production, even as export demand increased to make up for the global shortfall brought on by the conflict in Russia and Ukraine.

The Government of India (GOI) banned the exports of wheat in May ’22 and further restricted wheat flour shipments from July 22. However, the government still permitted a few shipments in order to meet the food security requirements of countries around the world. The move was aimed at ensuring adequate stocks for domestic consumption.

The nation only produces one crop of wheat per year, which is planted in October and November and harvested in March.

Efforts To Lower Wheat Prices

As part of efforts to lower prices, which jumped to a record high last month, India will provide an additional 2 million tonnes of wheat to bulk consumers like flour millers, the Government said on 21st February ‘23.

In addition to the 3 million tonnes announced last month, the allocation could aid in lowering local prices, which are currently higher than the government-set buying price of 21,250 rupees ($256.77) per tonne and lifted retail inflation in January.

Prices of wheat WHE-ATDEL-NCX have decreased by almost a quarter since the government announced the release of stocks on the open market in the month before.

According to a New Delhi-based dealer with a global trading firm, the government has been attempting to drive prices even lower toward the floor price to ensure that it can purchase sufficient quantities from farmers in the upcoming season. He further mentioned, “Farmers will not sell to the Government if open market prices remain above Government buying price.”

Current Situation

Wheat purchases by the state decreased by 53% to 18.8 million tonnes in the previous year as open market prices increased faster than the rate at which the government purchases the staple from domestic farmers.

Wheat growing north-western states have been witnessing sudden rise in the temperature, which could curtail wheat output like last year, said a Mumbai-based dealer.

According to a statement released on 20th February ‘23 by the India Meteorological Department (IMD), the maximum temperatures in the current week spiked up to 39 degrees Celsius in some states, which is up to 9 degrees Celsius above average.

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