India wheat prices jump to 6-month high on demand, limited supply

Wheat prices in India have risen to a six-month high as a result of tight supplies and increased demand ahead of the festival season.

New Delhi may lift import levies on the cereal to increase supplies and rein in costs before crucial state elections and the upcoming general election.

The government and the central bank may have a harder time keeping inflation in check if wheat prices continue to rise.

"Farmer supplies have practically dried up in all major producing states. A dealer in New Delhi expressed concern that flour mills were unable to secure adequate supplies.

The price of wheat in Indore, Madhya Pradesh, increased by 1.5% on Tuesday, reaching 25,446 rupees ($307.33) per metric tonne, the highest level since February 10. Over the course of the last four months, prices have increased by about 18%.

To prevent shortages during the holiday season, a dealer in Mumbai affiliated with a major trade business has suggested that the government release inventories from its warehouses into the open market.

Wheat inventories in government warehouses increased from 26.6 million metric tonnes to 28.3 million tonnes as of August 1.

Imports are essential for price reduction. The trader added, "The government can't increase supplies without imports."

According to Sanjeev Chopra, the top bureaucrat in the federal food ministry, India is considering reducing or possibly eliminating a 40% import duty on wheat and decreasing a cap on the amount of wheat stocks millers and merchants can retain.

According to the Ministry of Agriculture and Farmers' Welfare, wheat production reached an all-time high of 112.74 million metric tonnes in 2023, up from 107.7 million metric tonnes in 2022.

The yearly wheat consumption in India is close to 108 million metric tonnes.

The farm ministry in India may have overestimated the 2023 wheat harvest by 10%, but a major trade group warned Reuters in June that the actual yield will be at least 10% lower.

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