India's Wheat Procurement Expected to Decrease by 20%, Falling Below Estimates

According to government officials and traders who spoke to Reuters, India's wheat procurement in 2023 may decline by around 20% compared to the initial estimate. The slowdown in government purchases in recent days is attributed to a significant rise in local prices.

The world's second-largest wheat producer's lower-than-anticipated purchases could restrict New Delhi's capacity to intervene in the market and stabilize prices, which reached an all-time high earlier this year.

An anonymous senior government official stated, "Wheat procurement this year is likely to reach approximately 27 million tonnes, significantly surpassing last year's acquisitions."

In 2022, India's wheat procurement decreased by over half compared to the previous year, reaching 18.8 million tonnes. As the world's second-largest consumer of wheat, India imposed a ban on wheat exports in May 2022 due to a sudden increase in temperatures that negatively impacted crop yields. This ban was enforced despite a rise in global demand for wheat to compensate for the shortage caused by the Russia-Ukraine conflict.

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Over the past decade, the average wheat procurement in India was 31.5 million tonnes. Initially, the government of New Delhi aimed to purchase 34.15 million tonnes of wheat from farmers for the new season, considering the estimated record production of 112.2 million tonnes.

According to an unnamed government official adhering to official regulations, “the government has currently procured 26.1 million tonnes of wheat and continues to make purchases from farmers.”

The pace of procurement has decreased in recent days; however, government agencies have decided to extend the opportunity for farmers to sell their products until at least June 30.

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During this period, wheat prices in central India have observed a 5% increase, reaching 2,325 rupees per 100 kg, compared to the government's purchase price of 2,125 rupees.

According to a dealer from a global trade house based in New Delhi, wheat prices reached an all-time high in the latter half of the previous year due to a shortage in supplies. The dealer mentioned that this year, numerous farmers have chosen to withhold their harvest, anticipating a similar price surge during periods of low supply.

-Reuters

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