May 22, 2024

India’s Wheat Stocks Hit 16-Year Low Amid Record State Sales

In India, government warehouses are facing a significant decline in wheat stocks, reaching their lowest levels since 2008. This drop, down by 10.3% compared to the previous year, follows two consecutive years of reduced crop yields. As a result, record volumes of wheat have been sold to bolster domestic supplies and mitigate local price hikes.

Starting May 1, state reserves stood at 26 million metric tons, a decrease from 29 million metric tons in May 2023. However, this figure marks an increase from April’s stocks of 7.5 million metric tons due to recent purchases by the Food Corporation of India.

Despite the dwindling supply, the Indian government has refrained from incentivizing imports by maintaining a 40% import tax or engaging in direct purchases from major suppliers like Russia. Instead, it has tapped into state reserves to sell to bulk consumers, such as flour millers and biscuit makers, in an effort to stabilize domestic prices.

The Food Corporation of India’s decision to sell wheat to private players since June 2023 has resulted in a record-breaking sale of over 10 million tons from state reserves.

India’s wheat production cycle, with planting occurring from October to November and harvesting from March, sees new season purchases beginning in April to supplement state stocks. While this year’s May stocks are lower than the previous year, they still exceed the government’s buffer and strategic reserve target, which mandates wheat stocks to be maintained at or above 7.46 million tons starting from April 1.

It’s noteworthy that India banned wheat exports in 2022 amidst a global shortfall triggered by the Russia-Ukraine conflict, despite rising export demands.

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