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India’s Wheat Stocks Fall to 6-Year Low in December as Prices Jump to Record Highs

Picture Source: Internet

Wheat stocks in government warehouses in India fell to their lowest level in six years in December, government data showed on Tuesday, as prices jumped to record highs on rising demand and falling stocks.

Lower national reserves could hamper government efforts to release stocks to bring down wheat prices, usually done by bulk buyers such as flour and biscuit makers.

Total wheat stocks in state-owned stores stood at 19 million tonnes at the start of the month, down from 37.85 million tonnes on December 1, 2021.

Stockpiles in December are now at their lowest level since 2016, when they fell to 16.5 million tonnes as successive droughts in 2014 and 2015 cut wheat production.

“New crop supplies won’t start until four months away. The government’s task of stabilising prices is getting more difficult every month,” said a Mumbai-based trader at a global trading house.

“It cannot release more than 2 million tonnes per month to drive down prices. The market needs more because supplies from farmers have stopped, and traders are slowly releasing stocks,” he said.

According to data compiled by the Food Corporation of India, government stocks fell by about 2 million tonnes in November.

Wheat prices in India surged despite an export ban imposed in May by the world’s second-largest grain producer amid a sudden drop in crop production.

Local wheat prices have risen nearly 28% since the export ban was imposed in May, reaching 26,785 rupees a tonne on Tuesday.

A New Delhi-based trader said wheat production for the new season would return to normal levels, but prices will remain high until new season supplies gain momentum from April.

Indian farmers have sown 25.6 million hectares of wheat since the current planting season began on October 1, 25.4% more than a year ago.

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