November 11, 2022

 

India's soaring wheat prices could prompt government to announce price-cooling measures

 

India's trade and government sources said soaring wheat prices in the country could prompt the government to announce price-cooling measures, including the release of state reserves and the termination of the 40% tax on imports, the Times of India reported.

 

The government has been attempting to control food inflation, but due to wheat prices reaching record highs, this has proven difficult.

 

India banned the export of the grain in May after being alarmed by a sharp decline in crop yields. Growers and traders said that because farmers have run out of stocks, market arrivals from the previous harvest have slowed to a trickle.

 

Local wheat prices in India surged to a record INR 26,500 (~US$324.18; INR 10 = US$0.12) per tonne, up nearly 27% since the export ban in May.

 

Mansukh Yadav, a wheat trader from the city of Indore in central India, said demand is strong, but supplies are dwindling, adding that prices are rising and will remain stable until the new crop season begins in the following year.

 

According to government sources, India, the world's second-largest producer of wheat and its biggest consumer, may consider selling state stocks to large consumers like flour and biscuit manufacturers in order to lower prices.

 

One of the sources, who asked not to be named in order to comply with official regulations, said they are closely monitoring the price situation and will intervene.

 

Due to low inventories, traders claimed New Delhi was unable to release large quantities of stock. After domestic wheat purchases fell by 57% in 2022, the amount of wheat stocks in state warehouses at the beginning of October totaled 22.7 million tonnes, down from 46.9 million tonnes a year earlier.

 

The sources also suggested that the government might eliminate the 40% import tax on wheat. The increase in prices, according to a worker at a multinational trading company, confirms traders' estimates of this year's production of around 95 million tonnes, much lower than the government's projection of 106.84 million tonnes.

 

-      Times of India