Indian wheat prices have hit a record high due to high demand, limited supply and a delay in government release of stocks to increase supply, officials said on Tuesday. the industry.
Record prices are likely to push up retail inflation which hit a 14-month high in October, driven by a rise in vegetable prices and dwindling hopes for a rate cut. interest by the central bank next month.
Supplies are limited in the market and stockists are not willing to sell wheat at lower prices, said Pramod Kumar, a miller.
“If the government starts releasing stocks, supply will improve and prices will fall, as was the case last year.
In September, New Delhi lowered the limit on wheat stocks that traders and millers can hold in order to increase availability of the grain and moderate prices.
But the restrictions have failed to bring down prices, which were trading around 30,000 rupees ($355.64) per metric tonne in Indore, in the central state of Madhya Pradesh, down from 24,500 rupees in April and well above the minimum support price set by the government at Rs 22,750 for last season’s crop.
Traders expect prices to rise further as the new crop is not expected to hit the market before March, said a Mumbai-based trader working with an international trading house.
“Bulk buyers are feeling the pressure, as they need to buy to continue their business. The government must start releasing stocks immediately, otherwise prices will rise further,” he said.
India had initially planned to sell wheat from its state reserves to consumers in bulk from July, but this was delayed and there was no further update to its plans.
Last year, the government began selling wheat from its reserves in June, and between then and March 2024 it sold a record almost 10 million tonnes from stocks.
This enabled bulk buyers, such as flour millers and biscuit makers, to obtain supplies at affordable prices.
“The government is also holding smaller stocks than usual, which is why it is delaying sales,” the trader said.
Wheat stocks in state warehouses stood at 22.3 million tonnes at the start of November, slightly higher than last year’s 21.9 million tonnes, but well below the five-year average of 32.5 million tonnes.
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