Private trade to wait and watch before buying new wheat

The private trade and industry will not rush to buy wheat this year following unclear signals from the government on the stock limit – whether it will be extended after March 31. Besides, the industry is closely watching the Government’s move of currently selling wheat (for processing into atta) to cooperatives at ₹1750/quintal and farmers are likely to get ₹2700 in Madhya Pradesh and Rajasthan, (against ₹2275/quintal MSP) if the States implement poll promise this year.

“It has really become difficult to strategise when such policies are in operation. Ultimately we have to do business and if we have to ensure quality of our products we need to buy. We cannot be dependent entirely on government or Food Corporation of India as good quality wheat is not separately graded in FCI stock,” a senior executive of a leading corporate house said.

Earlier than normal buys

Asked about the options before private trade, he said due to stock limit imposed, only processors will be in the market. But, they will have to be cautious as the finished products will have to be sold at reasonable prices, he said. The chances of private trade buying any amount of wheat in Rajasthan and Madhya Pradesh will depend on what price the State government pays to farmers, another industry official said.

The Centre has planned to buy wheat earlier than normal mid-March as it wants to buy maximum grain this year due to depleting stock of grain. For the past two consecutive years, the FCI has missed the target of procurement due to the lower size of wheat harvest in India. The Food Ministry is likely to call a meeting of State Food Secretaries this month to assess the preparation on procurement of wheat if it has to start from February.

“We will be ready with our infrastructure so that whenever harvest starts arriving in the market, farmers will be able to sell,” an official source said adding the moisture content may be relaxed marginally if there is a need.

Output target

Though the government claimed wheat production increased in 2022-23 to over 110 million tonnes (mt) up from 107.74 mt in 2021-22, the private trade has put it at not more than 105 mt. The Agriculture Ministry has fixed the wheat production target at 114 mt for 2023-24.

After exceeding the season’s normal area of 307.32 lh, the pan-India wheat acreage further narrowed the deficit against the ear ago with a gap of about 4 lh until December 29. Latest data show that wheat acreage has reached at 320.54 lh compared with 324.58 lh a year ago, down by 1 per cent. The deficit was 2 per cent until December 22.

As the government has already sold over 5.5 mt of wheat in open market and is ready to sell upto 10.1 mt by March 31, prices in the retail market have been under control. The FCI was able to sell average ₹2,181/quintal in last week’s auction against reserve price of ₹2,129.

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