Wheat Prices Continue to Rise Amid Supply Constraints

New Delhi, May 24 (Commoditiescontrol): Wheat prices across major trading zones in India continued to rise due to supply constraints caused by declining arrivals in key production areas. Over the past 10 days, wheat prices have increased by an average of INR 50-70 per quintal, highlighting a short-term mismatch between supply and consumption demand for processing.

The Indian government has procured around 262 lakh tons of wheat, with total procurement expected to reach 265-270 lakh tons. With a starting balance stock of approximately 80 lakh tons, the government needs around 180-200 lakh tons for various schemes. Given the current stock scenario, the supply situation may tighten if the government decides to sell a substantial quantity of wheat in the open market.

The already weak supply situation in mandis is expected to persist as the government is unlikely to start selling through the Open Market Sale Scheme (OMSS) before the first week of June, coinciding with the announcement of election results. This delay is likely to keep wheat supplies constrained in the coming weeks.

Prices in major markets reflected this tight supply. In Delhi, prices traded up by INR 20 per quintal, reaching INR 2550 per quintal. In Rajasthan, new wheat traded up by INR 20 per quintal at INR 2610 per quintal. Bengaluru saw an increase of INR 29 per quintal, with prices reaching INR 2900 per quintal (net). In Madhya Pradesh, wheat prices rose by INR 20 per quintal to INR 2620 per quintal ex-warehouse. Uttar Pradesh prices were up by INR 20 per quintal at INR 2500 per quintal, while Gujarat saw a rise of INR 10 per quintal, reaching INR 2630 per quintal.

Internationally, wheat prices have surged by over 15% in the last 10 days. Ukraine-Russian import CNF quotes are now at USD 295-300 per ton. If India removes the import duty, CNF quotes would likely rise by at least USD 10-15 per ton, making imports at ports cost around INR 2750-2800 per quintal. Including freight and CHA charges of INR 200-250 per quintal, the delivered cost would be around INR 2950-3050 per quintal.

Even if the import duty is removed, it would take at least two months for wheat to arrive in India from the Black Sea/Russia. Given the current scenario, wheat prices are expected to continue rising in the near term, despite sluggish demand for processed wheat products at present.