Wheat Prices Surge Amid Weak Arrivals And Strong Demand

The period between 15 May 2023-21 May 2023 witnessed a significant rise in wheat prices in Delhi, with sustained demand driving the market. Despite lower procurement rates and weak arrivals, wheat prices strengthened by ₹80 per quintal, resulting in an overall price increase of ₹75/100 per quintal throughout the week. In this article, let’s delve into what’s happening in the wheat market in India.

Market Scenario

• Limited Wheat Arrivals Raise Concern– As of 18 May 2023, wheat arrivals in the markets amounted to approximately 3 million metric tons, which is significantly lower compared to April 2023 arrivals of 11.9 million metric tons. So far, May 2023 has seen weak wheat arrivals, contributing to a surge in prices. Achieving the arrival target of 9 million metric tons in the remaining days of this month seems challenging, given the trend observed in April 2023.

• Government’s Efforts To Stabilize Wheat Prices– To control any potential increase in the prices of wheat, flour, and other wheat products in the domestic market, the central government has decided to release wheat stocks into the open market every quarter, starting from July 2023. This move aims to improve supply availability and potentially stabilize or decrease prices.

• Conflicting Wheat Production Reports- While the government claims to have mitigated the damage caused by unexpected rainfall and expects higher wheat production this year, commercial estimates indicate lower yields. This discrepancy raises concerns that wheat prices may continue to rise.

Market Outlook

Given the current market conditions, it is anticipated that wheat prices in Delhi may reach up to ₹2,500/50 per quintal. However, the implementation of the government’s decision to release wheat stocks into the open market every quarter could improve supply availability, potentially leading to price stabilization or even a decrease.

OFB’s Insight

Last week witnessed strong growth in wheat prices due to sustained demand, despite lower procurement rates and weak arrivals. Limited wheat arrivals have raised concerns, as meeting the arrival target for the current month seems challenging. To control rising prices, the government plans to release wheat stocks into the open market starting in July 2023. However, conflicting reports on wheat production have created uncertainty regarding future price trends. It is expected that wheat prices in Delhi may reach higher levels.

Read more: Government Wheat Procurement Falling Short Of Target? Uncertain Outlook Ahead

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