The government is considering various steps to curb wheat prices

Taking a serious view of the 10 per cent rise in wheat prices since late June, the Center is considering various measures to bring down prices – from release of grain under the Open Market Sale Scheme (OMSS) to user industries to lowering import duty to zero.

In a meeting with representatives of the Roller Flour Mills Federation of India (RFMFI), food ministry officials said the Center is closely monitoring the availability of wheat for consumers and user industries, besides keeping an eye on price movements.

Above INR 300 per quint

Food ministry officials told representatives of the Roller Flour Mills Federation of India that the government “knows the tools to control price hikes and will take a call if the problem of availability and price hike beyond a price range continues in the coming days”.

A statement from the RFMFI said Anjani Agarwal, the federation president, told Food Minister Sudhanshu Pandey that wheat prices have increased by INR 300-350 per quintal. fifth in the past fortnight. “There is still uncertainty about the stabilization of prices,” Agarwal was quoted as saying in the statement to the food minister.

Millers bought wheat at INR 2,400-2,500 per quintal in major growing areas, while in other regions they have to pay INR 2,750-2,850. The situation is abnormal as the next harvest is still eight months away, Agarwal pointed out, adding that big traders and multinationals have cornered huge stocks.

Abundant central warehouses

He also urged the Center to take steps so that the situation does not go out of control.

In response, Pandey assured the delegation that the Center will control prices on the one hand and ensure smooth availability on the other, the statement said. He told the delegation that the Center currently has 26 million tonnes (mt) of wheat as stocks in the central pool. The stocks were more than the government’s requirement to distribute food grains under welfare measures and maintain buffer stocks.

RFMFI, on its part, urged the Center to release sufficient quantity of wheat under OMSS to rein in the market and reduce the import duty on wheat to zero from the current 40 per cent.

Both sides agreed that stockists, traders and millers could voluntarily declare the stocks of wheat they hold regularly. They agreed to review the situation after a fortnight, the statement said.

Export demand

According to Agmarket data, the net weighted average modal price (the rate at which most trades take place) for wheat has increased by 3 percent to INR 2,260 per bushel. quintal currently from INR 2,176 per quintal on 25 July. the price was DKK 2,050. Arrivals are still below 60,000 tonnes nationwide.

Data from the Ministry of Consumer Affairs shows that retail prices of wheat rose by 2.21 percent month-on-month to INR 30.47 per quintal. kg now, while wheat flour (atta) prices have increased by 2.8% to INR 34.85 per kg. kg.

Wheat prices have been higher than normal even before the food grain could be harvested this year due to export demand as its supplies on the global market were hit by the conflict between Russia and Ukraine. Both nations account for 30 percent of world trade.

Heat wave impact

In addition, Indian wheat production was affected by a heat wave that swept the country in March-April, and the Food Corporation of India was able to procure only 18.9 million tonnes of wheat from farmers, a 57 percent drop compared to last year .

All this resulted in wheat exporters and traders stockpiling a huge amount of wheat, but the Centre’s ban on exports of the grain from May 13 caught them unawares. However, they are holding on to the shares looking for prices to rise further, trading sources said.

On the Chicago Board of Trade, benchmark wheat futures fell 4.6 percent in the past month to $7.6 a barrel. bushel ($282.55 per ton), primarily due to a UN-sponsored agreement between Ukraine and Russia to ship wheat in the Black Sea region. According to the International Grains Council, US soft red winter wheat on the spot market is quoted at $323 per bushel. tons free on board and EU French Grade wheat at $350. Argentinian wheat is quoted at $410 and US hard red winter wheat at $368.

Published it

4 August 2022